Revealed: The superannuation shake-up leaving small businesses scrambling
Australian business owners say they ‘lie awake at night’ worried the nation’s biggest superannuation shake-up in decades will ‘crush cash flow’ and make it harder to survive.
Australian businesses are staring down the barrel of the biggest shake-up to superannuation since its inception, with sweeping changes set to leave small businesses scrambling to comply.
From July 1, 2026, employers will be forced to pay super contributions every payday instead of quarterly — a move experts warn could wreak havoc on cash flow, payroll systems, and already stretched business owners.
The new federal government legislation, which passed through parliament on Thursday, is designed to overcome the critical issue of unpaid super, which is currently estimated to cost workers billions annually.
Council of Small Business Organisations Australia (COSBOA) chairman Matthew Addison said the overhaul in the superannuation system would create more work and more cost for businesses.
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“It’s a drastic re-calculation of what cash is available and when … for smaller employers in the most extreme cases it’s nearly 118 days between when it’s getting paid … that means there is less cash in the business because the cash is being taken out and given to the super funds,” he said.
“In the long-term we don’t contest the vision … it is right, but we have to look at a realistic implementation time frame.
“Costs are going up for every employer in order to facilitate this payday super.”
As part of the superannuation reform, the Australian Taxation Office’s Small Business Superannuation Clearing House will also be closed on July 1.
Mr Addison said 270,000 small to medium businesses used this free service to make super contributions to their employees.
It means employers would now have to find a service to pay superannuation for them – that will come at a cost – or upgrade their payroll software to include super contributions.
“The start date is looming, small business owners are time poor, they don’t have full-time payroll officers,” Mr Addison said.
Mr Addison said the changes should be delayed to give business time to prepare.
“The council of small business has been calling for months to get the legislation through, get some certainty about what the expectation is … give our software – the clearing houses, the gateways and the super funds themselves, this also includes technology change at the ATO – give them all a chance to get it right and so let’s talk about payday super in 2028,” he said.
“We just need time to get the technology to enable this to work properly.”
Employers who don’t comply face hefty penalties, with interest charged on unpaid amounts.
James Griffin, Commercial Litigation Lawyer at Attwood Marshall Lawyers, said payday super was the most significant change to employment laws on the horizon for businesses.
He said there could be hefty penalties for non compliance.
“Where employers fail to pay contributions in full and on time, under the new reforms they will be liable for a Superannuation Guarantee charge, which includes a penalty on the business
and imposes interest on any overdue payments,” he said.
“Employers should also be alive to the risk of complaints by employees to the Fair Work Ombudsman or the Australian Taxation Office who may impose fines or other penalties on employers.”
The Financial Services Council (FSC) welcomed the introduction of the Payday Superannuation Bill to parliament.
“This reform is a significant advancement in making superannuation work better for Australians... it helps ensure people see the benefits of compounding returns sooner while also holding employers to account by making missed superannuation payments easier to detect,” FSC CEO Blake Briggs said.
“There are several implementation challenges that must be addressed to ensure a smooth transition process. The FSC is encouraged by the ATO’s intention to take a risk-based approach to compliance during the first year of the Payday Superannuation reforms. This is a sensible step that recognises the scale of transition required across payroll systems and business processes and provides reassurance for employers acting in good faith.”
The FSC’s Superannuation Practitioners Group (SPG) has been working with cross industry stakeholders on the implementation of Payday Superannuation and will host a workshop on 16 October.
The workshop brings together practitioners from across the sector to deliver a standardised approach to Payday Superannuation implementation and to reduce risks for funds, providers, and superannuation members.
A Business Chamber Queensland spokesman said recent industrial relations changes were another example of the compounding regulatory burden businesses had to navigate every day. “Businesses continue to face revolving industrial relations changes which impact how they operate,” he said.
“Businesses need to be supported to understand what changes mean for them and what they need to do to comply.”
IMPACT ON SMALL BUSINESS
Richard Kiss freely admits he and his wife Candice often lie awake at night worrying about the future of their cafes.
From humble beginnings with a food truck, to opening their first small cafe with three casual staff, they now operate three venues: Gather & Feast in Caboolture, Annie Lane on Bribie Island, and Ruby Tuesday in Burpengary East.
Together they employ 33 staff and last year alone paid $1.2 million in wages back into the Moreton Bay economy.
But the constant red tape of owning a small business, combined with increasing costs has the couple seriously worried for the future.
“Small business is the backbone of Australia, yet every year the rules are changed in ways that make survival harder,” Mr Kiss said.
“The national average profit margin for cafes is just 3 per cent, meaning every new layer of compliance, every cost increase, every red tape adjustment has a direct and painful effect on our ability to keep the doors open.
“My wife and I don’t sleep at night, we are always wondering, what will be next? What new tax or new regulation is coming?”
The couple value their staff and pay above award wage, but find constant government increases and changes – like payday super – hard.
“Superannuation has already risen to 12 per cent, now the government is preparing to enforce payday superannuation, requiring businesses to pay super every pay cycle instead of quarterly,” Mr Kiss said.
“We had already moved to monthly payments on the advice of our accountant, but forcing weekly or fortnightly super payments will crush cash flow for countless small businesses. It will leave no reserves for emergencies, breakdowns or unexpected costs.
“We believe in paying our staff fairly, we pay above the award wage because we value our team … But we reject the idea that constantly increasing wages and accelerating superannuation payments is the solution to the cost-of-living crisis. All it does is force up the price of every product and service across the country, leaving ordinary Australians worse off.”
“Hospitality is one of the toughest industries in Australia, it operates on the slimmest of margins, yet instead of support, small business owners are repeatedly hit with policies that make it harder to survive.
“We will fight against this shortsighted approach because it is driving good operators out of business and damaging the communities we support.”
