From 1 July 2026, the way employers pay superannuation is changing. These reforms – known as Payday Super – will require employers to pay super each time employees are paid, rather than quarterly.
What’s changing from 1 July 2026
Under Payday Super:
- Super must be paid on every payday (weekly, fortnightly or monthly, in line with your payroll cycle).
- Super contributions must be received by the employee’s super fund within 7 business days of the day wages are paid to the employee.
- The Superannuation Guarantee (SG) rate remains 12% but will be calculated on Qualifying Earnings (QE) instead of ordinary time earnings.
- Employers must report both Qualifying Earnings and super liabilities through Single Touch Payroll (STP).
- The ATO Small Business Superannuation Clearing House (SBSCH) will close permanently from 1 July 2026.
What are Qualifying Earnings (QE)?
Qualifying Earnings (QE) define which payments super is calculated on under Payday Super. QE becomes the single earnings base used to calculate super and any penalties if super is paid late.
In broad terms, QE includes:
- base salary and wages for ordinary hours
- paid leave (annual, personal/sick, long service leave)
- most allowances linked to duties or skills
- commissions and bonuses
- salary‑sacrificed amounts that would otherwise attract super
QE generally does not include overtime payments, expense reimbursements, or termination payments.
For many employers, QE will not significantly change the amount of super paid, but it standardises what super applies to and aligns the calculation with payday reporting.
What is the SBSCH and what’s happening to it?
The Small Business Superannuation Clearing House (SBSCH) is the ATO’s free service that many small businesses currently use to pay super for multiple employees in one place.
As part of the Payday Super reforms:
- The SBSCH closes permanently from 1 July 2026
- Existing users can only use it until 30 June 2026
- After closure, it cannot be used for payments or record access
Employers who currently rely on the SBSCH must transition to:
- payroll software with an integrated SuperStream clearing house, or
- a commercial clearing house provider.
⚠️ Important risk for employers using clearing houses
- If you use any clearing house (including payroll‑integrated clearing houses):
- Submitting super to a clearing house does not stop the 7‑business‑day clock.
- You remain responsible for ensuring contributions are received by the employee’s super fund within 7 business days of payday.
- Delays caused by clearing house processing, rejected payments, incorrect fund details, or SMSF issues do not extend the deadline.
- Late or missed payments will trigger the Superannuation Guarantee Charge (SGC) under a strengthened penalty regime.
For clients using Xero Payroll
Xero Payroll supports Payday Super, however compliance is not automatic and depends on how the system is configured and used.
In particular:
- Xero calculates super each pay run but does not enforce payment timing by default.
- Super must be paid and processed with every pay run to meet Payday Super requirements.
Clients using Xero must ensure they:
- Pay super every pay run (not monthly or quarterly)
- Have Xero Auto Super (or an equivalent SuperStream clearing house) active
- Approve and process super promptly after each payroll
- Monitor failed or rejected super payments, including SMSF contributions
- Transition away from the ATO SBSCH before its closure on 1 July 2026
- Simply accruing super in Xero without processing payment will not meet the new Payday Super requirements.
What you should do now
We recommend employers:
- Review payroll and super processes to ensure super can be paid every pay run
- Assess cash flow impacts of more frequent super payments
- Confirm employee super fund details, particularly for SMSFs
- Plan your transition away from the SBSCH, if applicable
- Test clearing house timing to ensure payments reach funds within statutory timeframes
How we can help
We are assisting clients with:
- Payday Super readiness reviews
- Payroll and clearing house configuration (including Xero Auto Super)
- SBSCH transition planning
- SMSF and rejected‑payment risk reviews
If you would like us to review your current setup or discuss what this means for your business, please contact us.
