tl;dr: Quarterly super payments allowed businesses to hold employees’ super contributions for up to 90 days. Paying super on payday removes that float and requires more frequent cash outflows. This article compares the two systems using real‑world numbers and shows how much working capital SMEs must either fund internally or through finance. A calculator is available at gpsfinance.com.au/payday-super-calculator to run personalised scenarios.
Quarterly vs Payday: The basics
Under the current regime employers must pay the super guarantee (12 % of OTE) at least quarterly. Contributions are due 28 days after the end of each quarter. This means super contributions for work performed in July–September can be paid as late as 28 October. Businesses may elect to pay more frequently but are not obliged.
From 1 July 2026 super must be paid at the same time as wages. Contributions must reach the fund within seven business days. The super guarantee continues to be 12 % but is calculated on qualifying earnings.
Cash‑flow modelling example
Scenario 1 – Quarterly Super: A professional services firm pays ten staff $8,000 per fortnight each. Super is 12 % of OTE. Each fortnight it accrues $9,600 in super (10 × 8,000 × 12 %). Over 13 weeks (one quarter) the firm accrues $124,800 in super but does not pay it until the quarterly due date. During the quarter that money stays in the firm’s bank account and can be used for operations or as a buffer against delays in client payments.
Scenario 2 – Payday Super: From 1 July 2026 the same firm must remit $9,600 after each pay cycle. Instead of holding $124,800 for up to 90 days, the firm has at most seven business days before the contribution must reach the super fund. If clients pay monthly, the firm may need to finance the super contributions for two pay cycles (approximately $19,200) until receivables are collected. If clients pay after 45 days, the working‑capital requirement is larger.
Comparing the cash‑flow impact
| Factor | Quarterly Super | Payday Super |
|——-|—————–|————-|
| Payment frequency | Quarterly or more frequently at employer’s choice | Every payday; contributions must reach super fund within seven business days |
| Working‑capital float | Up to 90 days’ worth of super contributions remain in the business bank account | Nil; only up to seven business days to remit contributions |
| Super base | Ordinary time earnings (OTE) | Qualifying earnings (QE) – includes OTE, commissions and salary‑sacrifice amounts |
| Penalties | SGC applies if contributions not received by fund within 28 days after quarter end; penalty includes 10 % interest and flat fee | SGC applies if contributions not received within seven business days; penalty includes daily compounding interest and administrative uplift |
| Tax deduction for penalties | SGC is not tax deductible | New SGC is tax deductible |
Long‑tail impacts
- Cash buffers vanish: Under quarterly payments, a business with a $2 million annual payroll holds $240,000 of super accruals (12 %) for up to three months. Under Payday Super the business must fund super contributions weekly or fortnightly from its own working capital.
- GST/PAYG and super align: The ATO encourages businesses to set aside GST, PAYG and super in separate accounts. With Payroll and super due simultaneously, businesses need to proactively manage these reserves.
- Admin workload increases: Payroll staff must calculate QE and process super payments every pay cycle. This may require new software and training.
Mitigation strategies
- Change pay cycles: Businesses paying weekly may switch to fortnightly or monthly to reduce the number of super payments. However, be mindful of employee expectations and modern awards.
- Negotiate with suppliers and clients: Align payment terms to shorten the gap between cash outflows and inflows.
- Use invoice finance or working‑capital facilities: These can bridge the timing gap between paying wages/super and receiving customer payments.
- Build a buffer: Use profits in 2025–26 to create a reserve that can cover the first few months of Payday Super.
FAQs
If I already pay super monthly, will Payday Super affect me? Yes. Even monthly payers will need to remit super at the same time wages are paid and ensure the funds receive contributions within seven business days.
Do casual employees or contractors fall under Payday Super? If a contractor is paid mainly for their labour, they are considered an employee for super purposes. Employers must include their payments when calculating QE.
Can I pay extra super early in the pay cycle? Yes. Employers can pay super more frequently or contribute ahead of time. However, contributions must still be calculated correctly and reported via STP.
Definitions
- Working‑capital float: Funds temporarily retained by a business before they are remitted to a creditor. Quarterly super payments created a float; Payday Super removes it.
- Cash conversion cycle: The time between paying suppliers/employees and receiving payment from customers.
External links
- [ATO – About Payday Super] – full details of the new rules.
- [ATO – Qualifying earnings] – guidance on what payments are included.
- GPS Finance Payday Super Calculator – interactive tool for cash‑flow modelling.
Want to understand how Payday Super affects your working capital? Speak with GPS Finance Group to analyse your specific scenario and discuss partnership opportunities.