Myths and misconceptions around Payday Super continue to confuse small and medium business owners less than 90 days out from the critical July 1 deadline.
Australian Tax Office Deputy Commissioner Emma Rosenzweig has moved to debunk what she’s called ‘common myths’ that may leave employers exposed when the reforms come into force at the beginning of the new financial year.
‘We know there is a lot of information being shared around but we want to make sure employers have the correct information and resources to get ready, and to get it right,’ says Ms Rosenzweig.
The deputy commissioner’s concerns follow research from Employment Hero’s Inside the Future of Super report which found 58 per cent of SME employers were not aware of the impending changes.
Rob Dunn, General Manager for Super, Payroll and Benefits at Employment Hero, has warned that cash flow is the single biggest hurdle for SMEs, particularly those still paying super quarterly.
Delaying Action Could Cause A Cash Flow Crunch
One of the most persistent myths, according to Deputy Commissioner Rosenzweig, is that employers can afford to wait until July to prepare.
The reality is that many businesses are closer to compliance than they realise. Ms Rosenzweig noted that up to 45 per cent of employers already pay super more frequently than the current quarterly minimum. For those businesses, the operational shift may be relatively modest.
But for employers still on quarterly cycles, the financial adjustment is significant and will place considerable strain on budgets. “The transition creates a significant cash flow hurdle,” says Dunn. “Modelling suggests the average small business may need to free up approximately $124,000 in working capital to meet the new real-time payment.”
Dunn has flagged that many SME owners have not yet mapped out what this looks like for their specific business, making it one of the most urgent planning tasks ahead of 1 July. Waiting until the deadline to address that gap leaves almost no room to negotiate credit terms, adjust invoicing cycles or build a cash buffer.
“Don’t wait until the last minute,” advises Deputy Commissioner Rosenzweig. “Take some time to understand the changes you may need in managing your cash reserves, checking timings on super payments and making sure your software supports reporting.”
Payday Super Changes Does Not Mean More Frequent Pay
Another common misconception the ATO is addressing is the belief that Payday Super forces employers to change how often they pay their staff. It does not.
Under the new rules, superannuation must be paid within seven business days of each payday. The frequency of pay runs, whether weekly, fortnightly or monthly, remains entirely at the employer’s discretion. Employees do not need to be paid more often, but their super contributions must follow each pay cycle rather than being batched up quarterly.
Ms Rosenzweig has cautioned that employers should not treat the seventh business day as a target to buy time, and building a buffer of a day or two could mean the difference between a clean payment and a late one. “A payment only counts once it is received by the employee’s fund, not when it is submitted,” she explains. “Submitting on day 7 may not allow enough time – you don’t get an extension for rejected payments so make sure there is enough time to correct any errors and for contributions to reach funds within the 7 business days.”
For SME owners running lean payroll operations, that means locking in a reliable process rather than relying on last-minute manual payments.
SMEs Using The SBSCH Face A Second Deadline
The ATO says some SME owners mistakenly believe they will be able to search records from the Small Business Superannuation Clearing House after June 30. But the deputy commissioner points out the free service will close permanently on 1 July 2026 and will not return in any form.
The SBSCH has allowed eligible small businesses to make a single super payment to one location and have it distributed across employees’ funds. Once it closes, that functionality disappears. Critically, the ATO has confirmed there will be no read-only archive. Employers who need records of past transactions must download their full history before the service shuts down.
“The good news is a majority of employers who currently use the Small Business Superannuation Clearing House already have super payment functionality in their current payroll software, so we encourage you to check this first,” Ms Rosenzweig says. For businesses that have never configured their software for super, now is the time to set it up and test it with a pay cycle or two before the July deadline.
1 In 4 SMEs Doubts It Can Comply Within Six Months
The readiness gap extends well beyond awareness. Employment Hero’s research has found that among employers who are aware of the new regime, one in four is not confident they can comply with Payday Super within the first six months.
That finding reflects the operational complexity involved. Businesses must review payroll systems, adjust cash flow forecasts, potentially switch away from the SBSCH and establish new payment workflows, all while managing day-to-day operations with limited staff.
“The ATO projects that there will be a 25 times increase in potential errors and returns and a potential 60 per cent increase in the fines that can be levied if you are late to pay,” Dunn explains.
But Ms Rosenzweig has offered an important reassurance for SMEs acting in good faith. “Employers who make an honest mistake and take steps to fix it quickly won’t be the focus of ATO compliance action in the first year,” she promises. That grace period, however, is not a reason to delay the transition.
To prepare for Payday Super, SMEs are advised to confirm their payroll software can meet the seven-day payment window, and model the impact of increased frequency on cash flow. If they need to transition away from the SBSCH to integrated payroll functionality before 1 July, they should ensure all historical records are archived first. Also, it may help to ask an accountant or payroll professional to identity any remaining compliance gaps and tailor the transition to specific business needs.
“With the right preparation and payroll technology, businesses can move from cash flow chaos to confident compliance,” Dunn says.
