Australia: Key Payroll Compliance Updates – July 2026

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The upcoming 2026-27 fiscal period introduces significant modifications to employer payroll mandates, encompassing superannuation, PAYG withholding, statutory reporting, and state-level payroll tax. This summary details the primary regulatory updates becoming effective from 1 July 2026.

Implementation of Payday Super

The introduction of Payday Super represents a major overhaul for the upcoming financial year, significantly altering the calculation methods and payment schedules for the superannuation guarantee (SG) while establishing more rigorous compliance standards:

Shift in Payment Schedules: Beginning 1 July 2026, the current quarterly SG payment requirement will be replaced by a mandate for employers to remit contributions simultaneously with salary and wage payments. These funds must be received by the employee’s chosen fund within seven business days of the payday. A grace period of up to 20 business days applies to a new hire’s initial contribution or for employees who have recently updated their fund details.
Introduction of Qualifying Earnings: The basis for superannuation calculations will transition from quarterly ordinary time earnings (OTE) to a broader metric known as qualifying earnings (QE), which integrates OTE with various other payment types.
Regulatory and Legal Framework: Following the parliamentary approval of Payday Super in November 2025 and the release of secondary regulations in February 2026, the ATO has provided transitional compliance directions for the first year via Practical Compliance Guideline PCG 2026/1.
Enhanced Penalties via SGC: Starting 1 July 2026, a more stringent Superannuation Guarantee Charge (SGC) framework will be managed directly by the ATO. This includes daily compounding interest, administrative increases based on historical compliance, and potential penalties ranging from 25% to 50% of the outstanding SGC.
Adoption of SuperStream 3.0: Coinciding with the new payment cycle, updated SuperStream standards require funds to process or return contributions within a three-business-day window of receipt.
Decommissioning of SBSCH: The Small Business Superannuation Clearing House (SBSCH) will cease operations on 1 July 2026. Employers currently utilizing this service must secure their historical records and migrate to a compliant alternative prior to the deadline.

Changes in Single Touch Payroll (STP) Phase 2

From 1 July 2026, employers reporting through STP must report both qualifying earnings and superannuation liability for each payee, replacing the existing reliance on ordinary time earnings.

New qualifying earnings (Q) code has been introduced and progressively deprecates the ordinary time earnings (O) code. Once an employer begins reporting qualifying earnings (Q), they must also report superannuation liability (L).

From 1 July 2026, employers are expected to report Q and L, but the ATO will not apply validation rules that reject non-compliant lodgements until 1 July 2027; employers making no genuine effort may still face contact or compliance action during 2026–27. From 1 July 2027, the O code will be fully deprecated and lodgements that do not include both qualifying earnings and superannuation liability will be rejected. Employers commencing mid-year must report full-year YTD qualifying earnings back to 1 July 2026.

Superannuation: Statutory Rates, Limits, and Thresholds

Superannuation Guarantee (SG) Rate: The current SG rate is maintained at 12%. Having reached this level on 1 July 2025, no additional increases are presently mandated by legislation.
Annual Maximum Contribution Base: The maximum contribution base for the 2026-27 period is established at $270,830. Should an employee’s qualifying earnings (QE) hit this annual ceiling, employers are permitted to cease minimum SG contributions (12%) for the remainder of that financial year.
Concessional Contributions Ceiling: The limit for before-tax (concessional) contributions has been adjusted to $32,500, rising from the previous $30,000. This threshold is indexed to average weekly ordinary time earnings in $2,500 steps, determined by December 2025 quarter data published on 26 February 2026.
Non-Concessional Contributions Limit: The after-tax (non-concessional) contributions cap, without being subject to extra tax for employees, has increased to $130,000 from $120,000. Consequently, the maximum bring-forward amount for qualified individuals will be raised to $390,000.

PAYG Withholding Updates

Statutory Tax Reductions: The marginal tax rate for income within the $18,201 to $45,000 bracket will drop from 16% to 15%, with a further reduction to 14% scheduled for 1 July 2027. No changes have been made to the $18,200 tax-free threshold.
Revised Withholding Tables: New PAYG withholding schedules released by the ATO take effect on 1 July 2026. Employers should notice a minor decrease in tax withheld starting from the initial July pay period.
Termination Payment (ETP) Caps: Caps for life and death benefit ETPs have risen to $270,000, up from $260,000. Payments falling within this cap are eligible for concessional tax rates, while any surplus is taxed at the highest marginal rate.
Educational Loan Repayments: Compulsory repayments for HELP and other study loans continue to follow the marginal system introduced on 1 July 2025, where repayments apply only to income exceeding the threshold. While the 2025–26 minimum threshold was $67,000, the ATO is expected to announce the indexed 2026–27 thresholds shortly.

Payroll Tax Updates

Northern Territory: From 1 July 2026, a new higher 6.5% tax rate applies to employers and groups with Australia-wide wages of $100 million or more. For all other employers, the rate remains 5.5%, with the existing $2.5 million threshold and deduction settings unchanged.
Australian Capital Territory: The ACT Government has confirmed several payroll tax changes for the 2026–27 financial year, announced as part of the 2025–26 Budget. Effective 1 July 2026, the payroll tax-free threshold reduces from $2.0 million to $1.75 million, bringing more employers into the payroll tax net. The payroll tax rate reduces from 6.85% to 6.75% for annual Australia-wide wages falling between $1.75 million and $20 million. Tiered surcharges apply for employers with wages over $50 million.
Other jurisdictions: Rates and thresholds for NSW, QLD, SA, WA, TAS and VIC remain unchanged from 2025-26