Payday Super could cost small businesses far more than the government’s $151 estimate, according to COSBOA. The peak body wants cost support and fairer penalties before rollout.
What’s happening: The Council of Small Business Organisations Australia is calling for major changes to Payday Super before its July 2026 launch. COSBOA wants a phased rollout starting with monthly payments, transitioning to full Payday Super no earlier than July 2030.
Why this matters: Under proposed legislation, employers must ensure superannuation contributions reach employees’ funds within seven business days of each pay cycle from 1 July 2026. Currently, this process typically takes five to 10 business days.
Australia’s peak small business body is warning that Payday Super risks becoming a compliance disaster unless the government adopts a more realistic implementation timeline and provides adequate support for the transition.
The Council of Small Business Organisations Australia has called on the Federal Government to rethink its approach to rolling out Payday Super, arguing that the current timeline and compliance design risk overwhelming small businesses and undermining the reform’s intent.
COSBOA Chair Matthew Addison said: “We support the intent of Payday Super, but good policy needs to work in practice. Small businesses want to do the right thing, but they need time to prepare, support to manage the compliance costs, and fair treatment when system failures occur that are outside their control.”
The Timeline Problem
Under the proposed legislation, employers will be required to ensure superannuation contributions reach employees’ funds within seven business days of each pay cycle, with the system due to begin on 1 July 2026. Currently, this process typically takes five to 10 business days.
COSBOA warns the proposed timeframe is unworkable without significant upgrades across payroll software, clearing houses, super funds and the Australian Taxation Office.
Addison said: “We’re trying to build a complex new system on foundations that aren’t ready. Every payroll provider, super fund and gateway needs to redesign and test their systems before launch, and that takes years, not months. The government’s own papers say it can take up to three years to implement. Right now, we have eight months.”
COSBOA recommends a phased implementation, moving firstly to monthly payments by 1 July 2026, with full Payday Super no earlier than 1 July 2030. This would allow time for payroll and super systems to be built, tested and integrated, and for employers to adapt.
Addison said: “Rushing this reform risks chaos. We need a proper foundation before enforcement begins.”
The Real Cost Question
The transition to Payday Super will bring significant new costs for small business, including increased software subscription fees, additional transaction charges and extra administrative time. COSBOA says these costs should not be borne solely by employers or their software providers.
Addison challenged the government’s cost estimates, saying: “The Government’s own Regulatory Impact Statement estimates the cost at just $151 per employer per year. That figure is not the reality. This is essential national infrastructure. Small businesses and the software developers who enable them should be supported to implement it.”
When Systems Fail
Under the proposed law, employers may face penalties even when super payments are delayed or rejected for reasons beyond their control, such as super fund errors or clearing house delays. COSBOA says that must change.
Addison said: “A small business that has paid on time and done everything right should not be penalised because another part of the system has failed. Employers should only be penalised if they miss a payment deadline.”
COSBOA has also raised concerns that the ATO’s proposed Voluntary Disclosure Statement system will not integrate with payroll software, requiring employers to manually re-enter data to confirm compliance.
Addison said: “That’s not reducing red tape, it’s doubling it. If the ATO is serious about modernisation, data should flow automatically through employers’ existing payroll systems.”
The peak body says it welcomes the government’s willingness to consult but urged ministers to listen carefully to what small businesses are saying before the system is rolled out.
Addison said: “This is one of the biggest payroll changes in decades. Small businesses want to get it right, but they need a clear, practical and achievable pathway to do so. Payday Super can be a good reform if it’s built on solid foundations. Let’s take the time to build it properly.”
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