What every Australian small business owner needs to know about superannuation in FY27
Key super changes since 1 July 2026, including Payday Super, new caps, and what to check now.
Chesney McDonald–Small business & finance writer/editor. Read Chesney's full bio
Published Tuesday 1 September 2026
Table of contents
Key takeaways
- Payday Super started on 1 July 2026 and now requires you to pay super contributions each time you run payroll instead of quarterly.
- The Superannuation Guarantee (SG) rate stays at 12% for the 2026–27 financial year, with no further legislated increases.
- Concessional contribution caps rose to $32,500 and non-concessional caps rose to $130,000, giving your employees more room to grow their retirement savings.
- The term "qualifying earnings" has replaced "ordinary time earnings" as the basis for calculating super contributions, effective from 1 July 2026.
What's changing with superannuation from 1 July 2026?
From 1 July 2026, several major superannuation changes took effect for Australian employers. If you run a small business with employees, these superannuation changes in FY27 affect how you calculate, pay and report super contributions.
The key changes from 1 July 2026 include:
- Payday Super: This replaced the current quarterly payment system, meaning you now pay super each payday rather than four times a year.
- Higher contribution caps: Both concessional and non-concessional caps increased from 1 July 2026.
- Transfer balance cap increase: The cap rose to $2.1 million.
- Division 296 tax: An additional 15% tax applies for balances between $3 million and $10 million, and 25% for balances above $10 million.
- Qualifying earnings: This term has replaced "ordinary time earnings" as the calculation base for super contributions.
- SBSCH closure: The Small Business Superannuation Clearing House closed on 30 June 2026 as Payday Super took over.
The biggest change for most small businesses is Payday Super. It has shifted your super obligations from a quarterly cycle to every pay run, so it's worth understanding how it works and what you need to do if you haven't already adjusted.
What is Payday Super and how does it affect your business?
Payday Super means you must pay super contributions each time you pay your employees, instead of quarterly. This is the most significant operational change to super compliance in years, and it affects every employer in Australia.
How Payday Super works
Under the previous system, you had until the 28th day after the end of each quarter to pay super contributions for your employees. Since 1 July 2026, that quarterly deadline no longer applies. Instead, you calculate and pay super as part of each pay run.
If you pay your team fortnightly, you send super contributions fortnightly. If you pay weekly, you pay super weekly. The contribution amount is still based on the SG rate of 12%, but it's now calculated on "qualifying earnings" for each pay period rather than on ordinary time earnings for the quarter.
This change applies to all employers regardless of size. Whether you have one employee or 20, the same rules apply.
The 7-day payment rule
You have seven days after each payday to send super contributions to your employees' super funds. This is the compliance window the Australian Taxation Office (ATO) has set for Payday Super.
For example, if your payday is Friday 4 September 2026, you must ensure super contributions reach your employees' funds by Friday 11 September 2026. The clock starts on your nominated payday, not on the day you process payroll.
Factor in processing times, as electronic transfers to super funds can take one to three business days depending on the fund. You may need to initiate payments well before the seven-day deadline to stay compliant.
Qualifying earnings explained
Since 1 July 2026, "qualifying earnings" has replaced "ordinary time earnings" (OTE) as the basis for calculating how much super you owe. Qualifying earnings is a broader definition that captures more types of payments to your employees.
Qualifying earnings generally includes:
- Base salary and wages
- Overtime payments
- Paid leave (annual leave, personal leave, long service leave)
- Allowances and loadings
- Bonuses and commissions
The key difference is that some payments previously excluded from OTE, such as overtime, are now included. This means the total super amount you pay for each employee may be slightly higher than before, even though the SG rate itself hasn't changed.
How to prepare your business for Payday Super
Adjusting to Payday Super doesn't need to be complicated. If your business hasn't fully transitioned yet, here are the practical steps to get compliant now.
5 steps to get ready
- Check that your payroll software can handle per-payday super calculations and payments. Most cloud payroll platforms have now updated their systems to support this.
- Confirm that your employees' super funds accept more frequent payments. Most large funds already do, but check with any smaller or self-managed super funds.
- Update your payment schedule to include super as part of each pay run, not as a separate quarterly task.
- Adjust your cash flow forecast to account for more frequent super outflows instead of four larger quarterly payments.
- Let your team know about the changes. While the obligation sits with you as the employer, your employees now benefit from receiving super contributions sooner.
What happens during the changeover?
The transition from quarterly to Payday Super had a clear cut-off. Employers needed to make their final quarterly super payment for the April to June 2026 quarter by 28 July 2026, as usual. From the first pay run on or after 1 July 2026, Payday Super rules have applied, with a seven-day payment window.
What's happening to the Small Business Superannuation Clearing House?
The Small Business Superannuation Clearing House (SBSCH) was a free service the ATO provided to help small businesses send super contributions to multiple funds in a single transaction. The SBSCH closed on 30 June 2026 as Payday Super took effect.
If you were using the SBSCH, you should already have set up an alternative way to pay super, as the service is no longer available. Check the latest guidance on the SBSCH closure for details on what to do if you haven't yet made the switch. Most cloud payroll platforms can send super payments directly to funds, which may simplify the process.
How Payday Super affects your cash flow
Moving from four quarterly payments to regular per-payday contributions changes your cash flow pattern. Instead of setting aside a lump sum each quarter, you make smaller, more frequent payments that align with your payroll cycle.
Here's a worked example to show the difference. Say you employ five people, each earning $70,000 per year. At the 12% SG rate, the total annual super cost is $42,000.
Under the old quarterly system:
- You paid $10,500 each quarter (four payments per year).
- Each quarterly payment was a significant cash outflow that you needed to plan for.
Under Payday Super with fortnightly pay runs:
- You pay approximately $1,615 each fortnight (26 payments per year).
- Each payment is much smaller and more predictable.
The total annual cost is the same, $42,000. But the cash flow pattern is smoother. You're no longer holding three months' worth of super contributions in your account before sending them in a lump sum. For many small businesses, this actually makes budgeting easier because the outflows are regular and consistent.
The trade-off is that you've lost the short-term cash flow benefit of holding super contributions for up to three months. If you were relying on that buffer, you'll need to adjust your working capital planning now that Payday Super is in effect.
Super guarantee rate for FY27
The Superannuation Guarantee (SG) rate stays at 12% for the 2026–27 financial year. This is the final rate under the legislated schedule of increases that began in 2021–22, and there are no further increases planned.
As an employer, you must pay 12% of each employee's qualifying earnings as super contributions. This applies to all eligible employees aged 18 and over, regardless of how much they earn. For employees under 18, the obligation applies if they work more than 30 hours per week.
The maximum contribution base for FY27 is $270,830 per year (this moved from a quarterly to an annual calculation under Payday Super). You don't need to pay super on earnings above this threshold, although you can choose to. For most small business employees, this cap won't come into play, but it's worth noting if you have higher-earning team members.
You can find the full rate history and current thresholds on the ATO's super guarantee page.
New contribution caps for 2026–27
Since 1 July 2026, both concessional and non-concessional contribution caps have increased. While these caps primarily affect your employees' personal super planning, understanding them helps you answer questions from your team and manage salary sacrifice arrangements.
Concessional contributions
The concessional contributions cap rose from $30,000 to $32,500 for the 2026–27 financial year. Concessional contributions are those made from pre-tax income, including:
- Employer SG contributions (the 12% you pay)
- Salary sacrifice contributions
- Personal contributions your employees claim as a tax deduction
If your employees have salary sacrifice arrangements, the higher cap gives them more room to contribute before hitting the limit. You may receive requests to adjust salary sacrifice amounts as employees take advantage of the new cap.
Non-concessional contributions
The non-concessional contributions cap rose from $120,000 to $130,000. These are contributions made from after-tax income.
Your employees can also use the bring-forward provision, contributing up to three years' worth of non-concessional contributions in a single year (up to $390,000), depending on their total super balance. This provision is most relevant for employees with lower super balances looking to catch up.
For the latest cap figures, visit the ATO's contribution caps page.
Transfer balance cap and Division 296 tax
Two additional changes took effect in FY27 that are worth knowing about, particularly if you're planning for your own retirement alongside running your business.
The transfer balance cap increased from $2.0 million to $2.1 million. This is the maximum amount you can transfer from your super accumulation account into a tax-free retirement income stream. If your super balance is approaching this threshold, the higher cap gives you a little more room.
Division 296 tax applies an additional 15% tax on earnings attributable to super balances between $3 million and $10 million, and an additional 25% for balances above $10 million. This brings the effective tax rate on those earnings to 30%. The tax has applied from the 2026–27 financial year onward, with FY27 being the first year of assessment. It affects you as an individual rather than in your role as an employer, but if you hold a substantial super balance through your business activities, factor it into your retirement planning.
What happens if you don't comply?
If you don't pay super on time under Payday Super, you may face the Superannuation Guarantee Charge (SGC). The SGC is the ATO's penalty mechanism for late or missed super payments, and it's more expensive than simply paying the super you owe.
The SGC includes:
- The super shortfall amount: This is what you should have paid.
- Nominal interest: 10% per annum, calculated from the date the payment was due until you lodge your SGC statement
- An administrative uplift: Calculated as a percentage of the SG shortfall (replacing the previous flat $20-per-employee fee), which may be reduced if you voluntarily disclose the shortfall to the ATO
Under Payday Super, the SGC shortfall component is tax deductible for qualifying earnings from 1 July 2026 onward, though the interest and penalty components remain non-deductible. Check with your tax adviser for specifics about your situation.
Under Payday Super, your SGC liability is calculated per pay period rather than per quarter. This means a missed payment in a single pay run creates its own SGC obligation. Staying on top of each pay run is essential to avoid penalties stacking up.
The ATO can also impose additional penalties for repeated or serious non-compliance, including director penalty notices that make you personally liable for unpaid super.
Simplify your super obligations with Xero
With Payday Super adding more frequent deadlines to your payroll routine, having the right tools in place makes a real difference. Xero's cloud payroll features help you calculate super contributions automatically each pay run, track payment deadlines and keep accurate records for ATO reporting.
Instead of managing super as a separate quarterly task, Xero integrates it into your regular payroll workflow. Super is calculated and ready to send each time you process a pay run, so you can stay compliant without adding extra admin to your week.
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FAQs on superannuation changes in FY27
Here are answers to common questions about the superannuation changes that took effect from 1 July 2026.
When did Payday Super start?
Payday Super started on 1 July 2026 and is now mandatory for all employers. If you haven't yet transitioned your payroll processes, you should do so immediately to avoid Superannuation Guarantee Charge penalties.
Does the SG rate change in FY27?
No. The SG rate remains at 12% for the 2026–27 financial year. The 12% rate is the final step in the legislated schedule of increases.
Is Payday Super now mandatory?
Yes. Payday Super has been mandatory for all employers since 1 July 2026. There's no option to opt out or continue with quarterly payments.
What if my super fund can't accept more frequent payments?
Under the new rules, super funds must accept contributions at any frequency. If a fund can't process your payment, it has three business days to refund the contribution so you can redirect it. Contact the fund early to avoid delays.
Do I still need to lodge quarterly super reports now that Payday Super has started?
Reporting requirements have been updated to align with Payday Super. Check the ATO's guidance on the current reporting framework for the latest requirements.
Is the SGC still calculated quarterly under Payday Super?
No. Under Payday Super, the SGC is calculated per pay period. If you miss or underpay super for a single pay run, the SGC applies to that specific period rather than being assessed at the end of the quarter.
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