Super is a key part of Australia’s retirement system and Payday super is set to reshape the way Australian businesses manage their payroll and superannuation obligations. Moving away from the current quarterly system, employers will soon be required to pay super at the same time as wages—tightening compliance requirements and bringing new implications for cash flow, payroll processes, and administration. While the change aims to improve outcomes for employees by ensuring their super is paid more frequently and on time, it also means business owners need to be proactive in reviewing their systems, budgeting practices, and reporting processes. Understanding how payday super works and preparing early will be key to staying compliant and avoiding unnecessary disruptions to your pharmacy.
What is Superannuation Guarantee?
Superannuation Guarantee (SG) is a compulsory system that requires employers to contribute a percentage of an employee’s ordinary time earnings into a superannuation fund to support their retirement savings. The SG rate may change each year depending on legislation and is currently set at 12% and is paid in addition to an employee’s salary. The system is regulated by the Australian Taxation Office (ATO) to ensure compliance, and employers who failed to meet their SG obligations can result in penalties. All employees above 18-year-old are entitled to receive this contribution and under 18-year-old employees are entitled if they work more than 30 hours.
Currently, superannuation payments are required at least four times a year, starting from the day an employee begins working for you. These contributions follow a quarterly schedule, with set due dates for each period (28 October, 28 January, 28 April and 28 July).
Changes to Superannuation Payment
The ATO has announced a big change to the superannuation payment, Payday Super, which will take into effect from 1 July 2026. This change will affect how Australian businesses handle payroll and superannuation.
For decades, the quarterly super cycle has been the norm. From 1 July 2026, that cycle breaks. Under Payday Super, super contributions must be processed in line with each pay cycle (such as weekly, fortnightly, or monthly pay runs), rather than being delayed until the end of a quarter. This change is designed to improve transparency and reduce the risk of unpaid or late super, helping employees build their retirement savings more effectively over time.
Below are some important points that you don’t want to miss:
1. Timeframe of payment
a. SG contributions must be received by the employee’s super fund within 7 business days of payday.
b. Exceptions apply for new employees or new funds. For the very first SG contribution made to a new employee or to an existing employee’s new fund, the deadline is extended to 20 business days from payday.
2. Qualifying Earnings (QE)
From 1 July 2026, employers in Australia will calculate both Superannuation Guarantee (SG) contributions and the Super Guarantee Charge (SGC) using a single, consistent earnings base known as “qualifying earnings,” replacing the current system where different bases are used. For most employers, this change won’t significantly affect the amount of super they pay.
Qualifying earnings (QE) include the following:
· Ordinary time earnings (such as regular wages, paid leave, allowances, bonuses, and lump sums)
· Commissions
· Salary sacrifice amounts that would qualify as qualifying earnings had they not been sacrificed to superannuation.
· Payments to workers classified as employees for SG purposes—including certain contractors mainly paid for their labour.
While some payments may fall into multiple categories, they are only counted once to avoid duplication. More information on qualifying earnings can be found on the ATO:
https://www.ato.gov.au/businesses-and-organisations/super-for-employers/paying-super-contributions/how-much-super-to-pay/list-of-payments-that-are-ordinary-time-earnings
3. Penalties and Late Payments
· Super Guarantee Charge (SGC): If payments are not received by the fund within the 7-business-day deadline, the SGC applies.
· New Penalty Structure: For Payday Super, the ATO has stated penalties will be 25% or 50% of the unpaid SGC (depending on prior history), a change from the current maximum of 200%.
· Interest: Late payments will incur interest (notional earnings) calculated daily based on the General Interest Charge (GIC) rate
4. Small Business Superannuation Clearing House (SBSCH) closure
The SBSCH will close to all users on 30 June 2026. If you currently use it, the ATO advises transitioning to an alternative SuperStream-compliant solution (like your payroll software) before 1 July 2026.
Action Plan
To ensure your pharmacy is ready for the transition on 1 July 2026, below are some items that you need to prepare:
· Review Employee Data: Inaccurate data is the main cause of rejected payments. Verify that all employee names, TFNs, contact details (mobile, email and home address), date of birth, and Super Fund details (name, ABN, SPIN/USIs and member number) are correct.
· Review "Qualifying Earnings" (QE): Ensure your payroll system is configured to calculate the 12% SG based on the new QE definition (see above)
· Onboarding process: make sure that employee’s super fund choice is captured at this time to avoid delay in processing the super payment. If the employee doesn’t have a superfund, it is recommended to create an account for them with your pharmacy’s nominated superfund.
· Cash Flow Budgeting: Since you will be paying super more frequently (weekly, fortnightly, or monthly to match your pay cycle), you must update your cash flow forecasts to account for more frequent outflows.
· Super Stream Compliant: Ensure you have a payroll software or clearing house that will be compliant in accepting super data and payments.
· Transition from Small Business Superannuation Clearing House (SBSCH): if your pharmacy is still using this service, it is recommended for you to move to a commercial clearing house or a SuperStream-compliant payroll software solution now to test the process before the deadline. Please note, SBSCH will close permanently at 11:59pm AEST on 30 June 2026. You must download all historical payment instruction records and employee details from the SBSCH beforehand as you won’t be able to access this information again after this time.
· STP Reporting: Ensure your software is ready to report both QE amounts and super liability in every Single Touch Payroll (STP) report from 1 July.
· Payment authoriser: if possible, it is recommended to have more than one person as the authoriser for superannuation payment to ensure that there’s no delay in the payment when one person is unavailable.
· Test your processes and procedures: Super isn’t paid instantly and can take a few days for the clearing house to pay the super into their funds so don’t leave this to the last minute. Review your procedures and processes and test that everything is in working order and if any changes are required to be implemented. From 1 July 2026, you are then prepared and can manage the new Payday Super like a pro!
While there might be more administrative work with the change, the ATO notes that Payday Super will lead to better retirement outcomes for employees for their money to be invested over time and grow until retirement. For your pharmacy, it means no more large, quarterly super payments—just a steady cash outflow with every pay run which will help with your cashflow budgeting.
Please note that this is just a general information about the upcoming changes. if you need specific advice or more information, feel free to contact us at admin@peakstrategies.com.au or call us on 08 9315 3117.