From 1 July 2026, Superannuation Guarantee (SG) contributions must be paid at the same time as wages, with these funds required to be received by the employee’s superannuation fund within seven (7) business days of the pay run being completed. The penalties for late superannuation payments have also changed. The following outlines how the new penalties and interest are calculated, and what to do when late superannuation payments occur.
Changes to Qualifying Earnings
From 1 July 2026, the way SG contributions are calculated will change from using two earnings bases — ordinary time earnings and salary and wages, which arose when shortfalls in superannuation payments occurred — to one earnings base: ‘qualifying earnings’.
For most employers this new term ‘qualifying earnings’ doesn’t change the amount of super guarantee you pay and all payments that were included in super guarantee calculations up to 30 Juen 2026 continue to be included as qualifying earnings from 1 July 2026 onwards. The additional payment type now also includes commissions for work done entirely outside of ordinary hours. If you have these types of payments, you must now also pay superannuation guarantee.
Updated Interest and Penalties
There have been several changes to how interest and penalties relating to late superannuation payments are calculated, as well as the deductibility of various components. To calculate and understand the interest and penalties, you must first determine the ‘base SG shortfall’ and ‘final SG shortfall’.
Base SG shortfall = the difference between the employee’s SG amount and eligible ‘on-time’ contributions for the QE day, being the day payment of qualifying earnings is made, or payday.
Final SG shortfall = the base SG shortfall less any eligible ‘late period’ contributions for the QE day, being any superannuation payments made after the seventh day from the QE day and before an SG charge notice of assessment is issued by the ATO.
The SG charge notice of assessment can be issued either on the Commissioner’s own initiative, based on information held by the ATO, or following a voluntary disclosure statement lodged by the employer. Once a late superannuation payment is identified, we recommend reporting it to the ATO via a voluntary disclosure statement as soon as possible, along with making the required payments. The SG voluntary disclosure statement can be found on the ATO website.
These two shortfall amounts are used to calculate the ‘notional earnings component’ and the ‘administrative uplift’, which replaces the previous $20 per employee administration fee.
Notional earnings component – calculated by multiplying the base SG shortfall by the GIC rate, which can be found on the ATO’s website.
Administrative uplift – ranges from 0% to 60% of the sum of the total final SG shortfall and total notional earnings. The rate depends on the number of days between the QE day and the date the voluntary disclosure statement is lodged, as well as whether the employer has been assessed to pay the super guarantee charge in the last two years.
The Cost of Late Payment
The following table outlines the difference in the amount payable between an on-time superannuation payment and no superannuation payment being made until 15 days after the seven business days from the QE day.
The table below summarises the amounts payable on $6,000 of qualifying earnings with a QE day of 1 July 2026 and an on-time superannuation contribution date of 10 July 2026, being seven business days later. In this example, no superannuation was paid and an SG charge notice of assessment was issued on 1 August 2026, 22 days late. The GIC rate used to calculate the notional earnings component for this period is 0.03131507% daily, or 11.43% annually. The percentage used to calculate the administrative uplift is based on no voluntary disclosure statement being lodged (40%).
Additional costs of $294.94 are incurred due to this small-scale late payment, so imagine the impact this could have on a larger scale.
Importantly, late payments of superannuation are NOT tax deductible, meaning the out of pocket cost is further increased to business.
Our team is here to support you. If you require assistance, please contact our office.
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