If you are lucky, you will only hear your accountant say ‘tax time again’ once a year.

With the introduction of payday super on 1 July, sole traders, partners and company directors may be having their tax time 52 times a year.

Payday super will fundamentally change the way that tax is administered in Australia, and combined with the ATO interpretation of who is an employee for super guarantee purposes, this year presents enormous challenges for arts businesses to stay afloat.

A decade ago, it was possible to prepare artist tax returns using spreadsheets and receipts – even the shoebox method was acceptable. Now, any artist in business that does not use bookkeeping software is taking a risk with its ability to comply with the new ATO regulations.

What is payday super?

According to the google AI Overview:

From 1 July 2026, Payday Super requires Australian employers to pay employee superannuation guarantee contributions at the same time as their salary and wages, rather than quarterly. Payments must reach the employee’s super fund within seven business days of payday. This initiative aims to reduce unpaid super and improve retirement savings. 

Breaking this down, the main points for the new system are:

• super has to be paid concurrently with wages
• quarterly payments no longer comply with super guarantee
• super payments must be received by the employee’s super fund within seven business days of wages being paid

The finer points require professional assistance. It is not recommended that you rely on ChatGPT or search engines once you understand the basic details above.

Wages

First, let’s look at wages. For super guarantee charge (SGC) purposes, super is paid on ordinary time earnings. This is a wide definition and covers employees, directors and contractors. The ATO is casting a wide net over eligibility for super guarantee, focusing on control of the employment contract and the extent of services performed by labour rather than capital.

Employee wages are based on industrial awards and have to be processed with software that is compliant with STP (single touch payroll) requirements. STP includes super guarantee. But how do you process super for contractors or directors who do not receive regular payments throughout the year? Systems need to be developed to handle these irregularities (which are in fact regular features of the creative industries).

Second, superannuation. The super guarantee rate is 12% of gross wages, however there are other considerations such as the concessional contributions cap of $30,000. Close attention has to be paid to this issue during the transition period in July 2026 from quarterly SGC to payday super, otherwise excess contributions tax could apply. There is also a common misconception that small wages are exempt, but the main exemptions are actually age-based limits for employees, meaning almost all wages that an employer pays will attract SGC for employees aged between 18 years and 75 years.

Payment of Super

Third, payment of super. From 1 July 2026 the quarterly system that has been in place for more than 30 years will no longer apply. Businesses will have seven business days to pay super to their employees, but the ATO Small Business Super Clearing House (SBSCH) will not be able to help them. It is being abolished. For this reason, an alternative to the SBSCH must be in place well before 1 July.

Employers can change the number of times they pay employees throughout the year to reduce compliance, but the minimum requirement is monthly. You can imagine this will not be welcomed in all workplaces throughout Australia, but it is recommended that any changes to pay cycles be implemented before the end of June.

Compliance

However, the big issue is not how you define wages, how you pay super and the number of paydays per year. It is what happens if you fail to comply with these new obligations. There are two main aspects – completing a super shortfall statement and paying a penalty. Both are to be avoided if you wish to run a successful business.

The super shortfall statement lists the employees whose super has not paid on time and their super fund. The penalty consists of an administrative charge (currently $20 per employee) and an interest charge for the loss of earnings in the employee super fund. The penalty is non-deductible, however currently the highest number of times a small arts business would need to complete a super shortfall statement is four times a year.

From 1 July that could increase to 52 times a year. If you only have one employee, being paid weekly and you missed the payday super deadline each week for the first year of the new system, the annual administration fee would be $1,040 and you would have to complete 52 shortfall statements or pay an accountant or bookkeeper to do it for you.

Returning to the last sentence of the google AI Overview, the aims of payday super, essentially preventing wage theft to increase retirement savings, is noble and hard to argue with. It is how you get from here to there that requires investigation.