Superannuation Changes From 1 July 2026: What Australian Employers And Members Need To Know

From 1 July 2026, three significant superannuation changes will reshape the Australian retirement landscape. These reforms will affect employers, employees, and individuals with large super balances. Here's your comprehensive guide to what's changing.

1. Payday Super: The End of Quarterly Payments

What's Changing?

From 1 July 2026 you must pay employees their super guarantee on payday, at the same time as their salary and wages.



This represents a fundamental shift from the current quarterly payment system that has been in place for decades.

The New Payment Timeline

From 1 July 2026, employers must ensure superannuation contributions are received by employees' funds within seven business days of each payday (Qualifying Earnings day).

This means:

• Weekly payroll = Super must be paid weekly
• Fortnightly payroll = Super must be paid fortnightly
• Monthly payroll = Super must be paid monthly

The seven business day requirement is strict — it's measured from when the contribution is received by the fund, not just when it's processed or sent.

What is "Qualifying Earnings"?

The super guarantee amount is calculated as 12% of qualifying earnings (QE). QE includes OTE, salary sacrifice contributions and other amounts that are currently included in an employee's salary or wages for super guarantee.

This is a broader definition than the previous "ordinary time earnings" (OTE) concept.

Critical: Small Business Superannuation Clearing House Closes

The SBSCH closed to new users on 1 October 2025. Existing users have access to the service until 30 June 2026. All users must transition to an alternative option to pay their employees' super.

Action Required: If your business currently uses the SBSCH, you must transition to a payroll-integrated solution or alternative clearing house before 1 July 2026.

ATO Compliance Approach for First Year

The ATO has released PCG 2026/1, setting out a risk-based compliance approach for the first year of the new regime (1 July 2026 – 30 June 2027).

The ATO will categorise employers into risk zones:

• Low risk: Employers who attempt to pay SG on time and correct errors as soon as reasonably practicable
• Medium risk: Employers where individual SG shortfalls are rectified within 28 days after the end of the relevant quarter
• High risk: Employers with ongoing non-compliance

Penalties Under Payday Super

The SGC applies when amounts aren't received by a super fund within 7 business days of payday (unless an extended timeframe applies, such as for new employees).



The new Super Guarantee Charge (SGC) framework applies per pay period, meaning late contributions could attract interest and penalties more frequently than under the quarterly system.

What Employers Should Do Now

✅ March–April 2026: Audit your current payroll setup and identify gaps

✅ April–May 2026: Test payroll system changes and SuperStream connectivity

✅ May–June 2026: Verify employee fund details and model updated cash flow

✅ 1 July 2026: First compliant pay run with super paid on same day as wages

2. Contribution Caps Increase

New Caps from 1 July 2026

From 1 July 2026, the concessional contributions cap rises from $30,000 to $32,500, the non-concessional cap rises from $120,000 to $130,000, and the bring-forward maximum increases from $360,000 to $390,000.These increases are driven by CPI indexation and represent a genuine opportunity to get more money into the superannuation environment at concessional tax rates.

What Remains Unchanged

The Transfer Balance Cap remains at $2 million and the Superannuation Guarantee rate remains at 12%.Note: The SG rate increased to 12% on 1 July 2025, completing the legislated increase schedule.

Maximum Super Contribution Base

For high-income earners, employers are not required to pay SG on earnings above the maximum super contribution base. For the 2025 – 2026 financial year, the maximum super guarantee contribution that an employer must pay is increased to 12% of $250,000 per year, or $30,000. 

3. Division 296 Tax: Additional Tax on Large Super Balances

What is Division 296?

The new SMSF Division 296 Super Tax introduces an additional tax on superannuation balances above $3 million and will impact some SMSF members from 1 July 2026.Division 296, the additional earnings tax on super balances above $3 million, also commences on 1 July 2026.

Who Will Be Affected?

According to Treasury estimates, approximately 80,000 Australians (about 0.5% of the population) currently have superannuation balances exceeding the $3 million threshold and would be affected by Division 296 in its first year.This typically includes:

• Long-term retirees with decades of compound growth
• High-income professionals (doctors, lawyers, executives)
• Business owners who have sold a business and contributed proceeds to super
• Property investors holding high-value assets within SMSFs

Two-Tier Tax Structure

For individuals with a total superannuation balance (TSB) greater than $3 million, Division 296 tax will be assessed at 15 per cent of attributable Division 296 earnings (based on the proportion of earnings that are attributable to balances in excess of $3 million) For individuals with a TSB greater than $10 million, Division 296 tax will be assessed at an additional 10 per cent of attributable Division 296 earnings (based on the proportion of earnings that are attributable to balances in excess of $10 million).

In plain English:

• Balances above $3 million: Additional 15% tax on proportional earnings
• Balances above $10 million: Additional 25% tax (15% + 10%) on proportional earnings

When combined with existing super fund tax rates, this results in "headline" rates of 30% and 40% respectively.

What Counts as "Earnings"?

Major change from original proposal: The tax will only apply to future actual realised earnings, not unrealised gains as originally proposed.This means Division 296 tax applies to:

• Interest and dividends
• Rent (for SMSF property)
• Realised capital gains
• Less deductible expenses

Indexation of Thresholds

It is also confirmed that these TSB thresholds will be indexed in line with increases in the Consumer Price Index (CPI): The $3 million TSB threshold increases only in $150,000 increments, meaning indexation must exceed $3,150,000 before the threshold is increased to $3,150,000The $10 million threshold will be indexed in $500,000 increments.

Transitional Rules for 2026-27

For the first year of operation, a special transitional rule applies where the Total Super Balance is measured at 30 June 2027, allowing individuals time to adjust their super balances, if necessary, before the tax begins.Therefore, an individual's Total Super Balance at 30 June 2026 is not relevant.This gives affected individuals until 30 June 2027 to make strategic decisions about their retirement planning.

SMSF-Specific Opportunity: Capital Gains Relief

SMSFs have a unique transitional opportunity:

A one-off, optional cost base reset will be available to self-managed super funds (SMSFs), allowing trustees to reset the cost base of all fund assets to their market value as at 30 June 2026.

How it works:

In other words, if an SMSF asset was bought years ago for $1 million, is worth $2 million on June 30, 2026, and is eventually sold for $ 2.5 million, a fund that "opts in" will be able to work out capital gains for Division 296 tax based on $ 500,000 ($2.5 million less $2 million) rather than $1.5 million ($2.5 million less $1 million).

Important conditions:

• The election is all-or-nothing — applies to all CGT assets held at 30 June 2026
• Assets cannot be selectively chosen
• Once made, the election cannot be reversed
• The election must be lodged by the due date of the 2026-27 SMSF annual return
• This is only for Division 296 purposes — does not affect normal CGT calculations

Action Points for Different Stakeholders

For Employers:

1. Immediately: Review and upgrade payroll systems for payday super compliance
2. By May 2026: Transition away from SBSCH if currently using it
3. Before 1 July 2026: Test SuperStream connectivity and payment processing times
4. Ongoing: Model cash flow implications of more frequent super payments

For Employees:

1. Consider the increased contribution caps for additional voluntary contributions
2. Review salary sacrifice arrangements in light of payday super
3. Check your super is being paid correctly from first pay run after 1 July 2026

For High-Balance Super Members (>$3M):

1. Before 30 June 2027: Consider whether to reduce Total Super Balance below $3M threshold
2. For SMSF members: Assess whether to opt into capital gains relief by 30 June 2026
3. Seek advice: Model the impact of Division 296 on your specific circumstances
4. Estate planning: Consider implications for wealth transfer strategies