Missing a super payment has always had consequences. But as of 1 July 2026, Payday Super has raised the stakes – and narrowed the window to get super payments right.
Under the old quarterly system, a business could technically fall behind on super for three months before it became a real issue. Now super is due every payday, with contributions needing to reach a contractor or employee’s super fund within 7 business days of payment.
This means more chances to fall behind, and less wiggle room.
If you miss the 7-day window, you may face penalties from the ATO – which is why it’s more important than ever to get your processes right. Here’s everything you need to know about Payday Super penalties.
📖 Not sure what Payday Super is, or if it applies to your business? Check out our quick explainer on the new Super Guarantee system.
The ATO’s Super Guarantee Charge
When a business fails to pay the superannuation guarantee on time, or pays less than what’s owed, they become liable for the Super Guarantee Charge (SGC).
The SGC is not just a bill for the missing super – it’s a separate, more expensive obligation. Under Payday Super, it’s made up of four components, each calculated per payday (what the ATO calls a QE day, or Qualifying Earnings day):
1. The SG shortfall
First, you’re liable for the full amount of super that should have been paid but wasn’t. This is calculated at 12% of qualifying earnings for that pay cycle.
If you make a late contribution before the ATO issues an assessment, it can reduce this component – but the other three components may still apply.
2. Notional earnings
This is interest on the shortfall, calculated at the general interest charge (GIC) rate, and compounded daily. Notional earnings start accruing the day after the 7-business-day window closes and keeps running until either you make a late contribution that clears the shortfall, or the ATO makes an assessment.
We can’t stress this enough: This interest compounds daily. The longer you wait, the faster this amount grows!
3. Administrative uplift
Administrative uplift is calculated at 60% of the combined shortfall and notional earnings for that pay cycle. This is a significant addition to the base amounts, and it applies even if you eventually pay the missing super late.
4. Choice loading
Choice loading is an additional 25% of the contribution value if you haven’t followed the correct choice of fund rules for that employee – eg. you’ve paid to the wrong fund, or not provided a fund choice to a new worker. This is capped at $1,200 per notice period.
Late-payment penalties for the SGC
The ATO calculates the SGC and sends you a notice of assessment. Once assessed, you have 28 days to pay.
If you don’t hit that deadline, the ATO will issue a Notice to Pay. If that’s also ignored, a late payment penalty of 25% of the outstanding SGC amount applies.
This late penalty rises to 50% if you’ve been liable for the same penalty in the previous 24 months. This late payment penalty cannot be remitted.
Why you should avoid the SGC
The 60% administrative uplift alone makes it costly
Even setting aside notional earnings and choice loading, the 60% administrative uplift on the shortfall means that a missed $1,000 super payment doesn’t just cost you $1,000.
It actually costs you:
- The original $1,000 super payment,
- Plus daily compounding interest,
- Plus $600+ in uplift
…all before the ATO has even assessed you.
The components stack quickly!
Post-assessment costs may not be tax deductible
Under the new Payday Super rules, the SGC itself may be claimed as a tax deduction. However, any general interest charge that accrues on unpaid SGC, and the late payment penalty for failing to pay the SGC after assessment, are generally not tax-deductible.
So while the base SGC charge is deductible, the cost of ignoring it after assessment is not.
It compounds per pay cycle
Under the old quarterly system, a missed payment meant one SGC calculation per quarter. Under Payday Super, every payday is a separate QE day, and a separate SGC event.
Miss several pay cycles and each one carries its own shortfall, notional earnings, and 60% uplift. It all adds up fast.
What else can the ATO do?
Beyond the SGC itself, the ATO has a broader set of tools at its disposal to chase unpaid super:
Director liability
If a company fails to pay the SGC, company directors can become personally liable for the unpaid amount through a Director Penalty Notice (DPN). This makes directors personally responsible for the debt, and can apply even after the company has wound up.
The ATO has signalled it may move more quickly to issue DPNs for businesses that don’t engage with outstanding obligations.
ATO audits and reviews
The ATO actively monitors SG compliance using Single Touch Payroll data matched against super fund contribution records.
Under Payday Super, that data is more granular than ever; every pay cycle is a potential compliance checkpoint. The ATO has stated publicly that Payday Super will allow it to detect unpaid super earlier and act faster.
Garnishee notices
Where SGC debts remain unpaid, the ATO can issue garnishee notices, directing banks, financial institutions, or trade debtors to pay amounts owing directly to the ATO from funds held on the employer’s behalf.
Publication of non-compliant employers
In cases of significant or repeated non-compliance, the ATO has the power to publish the names of employers who have failed to meet their SG obligations.
The 7-business-day rule
Like we said earlier, under new Payday Super rules, a super contribution needs to reach a worker’s super fund within 7 business days of their payday.
This matters because the 7-day window isn’t about when you initiate the payment, it’s about when the funds arrive. Super payments move through a clearing process before reaching individual funds, and delays can happen.
If your payment is initiated late, or held up somewhere in the pipeline, you could still miss the window even if you thought you’d acted in time. This is one of the reasons that having a reliable, streamlined process for super payments isn’t just convenient under Payday Super – it’s a compliance requirement.
Will the ATO enforce penalties straight away?
Fair question – and the honest answer is probably not, if you’re genuinely trying.
The ATO has published a formal compliance guideline (PCG 2026/1) covering how it plans to use its enforcement resources in the first year of Payday Super, from 1 July 2026 to 30 June 2027.
The short version: businesses that are making a genuine effort to get payments right, and fixing problems quickly when they crop up, won’t be the ATO’s priority.
That said –
This isn’t an amnesty.
Payday Super rules apply from 1 July 2026. The SGC will still kick in if payments are late.
What the guideline does is signal where the ATO will focus its attention: on businesses that are persistently missing payments, ignoring rejected contributions, or making no real effort to transition. If that’s not you, you’re unlikely to be first in line for penalties.
💡 Note: This first-year approach ends on 30 June 2027. After that, it’s full enforcement, no carve-outs.
The practical upshot: the ATO has essentially said it understands this is a big change and isn’t looking to make an example of businesses navigating it in good faith.
What should you do if you’ve missed a payment?
If you’ve missed a super payment or think you may have underpaid, the ATO does offer a voluntary disclosure pathway. Coming forward proactively, rather than waiting to be audited, can result in reduced penalties. A qualified tax professional can help you work through the process and understand your obligations.
💡 Note: The information in this article is general in nature and is not personal tax or legal advice. If you believe you may have a super shortfall, we’d recommend speaking with a registered tax agent who can assess your specific situation.
Other recent changes
OTE is now Qualifying Earnings (QE)
From 1 July 2026, the earnings base used to calculate super has shifted from Ordinary Time Earnings (OTE) to Qualifying Earnings (QE) under the Payday Super reforms.
In most contractor scenarios this won’t change your calculation dramatically, but the terminology is different in Single Touch Payroll (STP) reporting, and it’s worth being across.
The $450/month threshold is gone
The $450/month threshold was removed in 2022 – but it does still catch businesses out. If a contractor is eligible, SG kicks in from the first dollar of qualifying earnings, including low-income or irregular engagements.
📖 Not sure whether your contractors are eligible for SG in the first place? Learn more about eligibility in our guide to paying SG for contractors.
Payday Super for your contractors, sorted.
These penalties aren’t designed to catch businesses out; they’re designed to make sure workers actually receive the super they’re owed. The simplest way to avoid all of this is to get your process right from the start.
ContractorSuper by Hnry facilitates SG payments to the right super funds for your contractors (including ABN sole traders) accurately and on time, every pay cycle.
You calculate super liability, complete your STP reporting, and send us one payment along with a schedule of who gets what. We take care of the rest, allocating contributions, handling return notifications and errors, and sending you audit-ready reporting every pay cycle.
Because contributions move through our clearing house partner’s SuperStream-compliant process, you can be confident that payments are routed correctly and within the required timeframes. No manual splitting, and no chasing up rejections on your own. If anything does get returned, we catch it first and let you know exactly what needs fixing.
We’re also over 50% cheaper per transaction than traditional super processing models, and for contractors already using Hnry, their super processing is completely free.
Learn more about ContractorSuper