Payroll

3 Payroll Laws Changing 1 July 2026 Every Australian Small Business Must Know

16 June 2026 · 9 min read

Quick Answer

From 1 July 2026, employers must pay super within 7 business days of each payday (Payday Super), the national minimum wage rises, and Single Touch Payroll reporting rules tighten. These three changes arrive at once — businesses that don't update their payroll systems by 30 June 2026 face ATO penalties and potential Fair Work breaches from day one.

On 1 July 2026 — now just 15 days away — three separate payroll obligations change at the same time. Payday Super forces employers to remit superannuation within 7 business days of every payday instead of quarterly. The Fair Work Commission's minimum wage decision lifts base pay rates across every modern award. And the ATO closes the last remaining Single Touch Payroll Phase 2 deferrals, meaning all employers must report in full STP2 format from that date.

None of these changes are optional, and none have a grace period. The ATO has confirmed that Payday Super shortfall interest charges apply from the first missed payment cycle — not at the end of the quarter like the old system. A small business with five employees paying fortnightly could face a penalty event every 14 days if their payroll process isn't updated in time.

This post breaks down each of the three changes in plain English, gives you the specific figures and dates you need, and tells you exactly what to do before 30 June 2026. If you're currently using manual payroll, a spreadsheet, or a platform whose price just jumped — this is your practical checklist.

Change 1 — Payday Super: Super Must Now Be Paid Within 7 Business Days of Each Payday

Payday Super is the most operationally disruptive change hitting Australian small businesses on 1 July 2026. Under the Treasury Laws Amendment (Payday Super) Act 2026, employers must pay superannuation guarantee contributions to a complying super fund within 7 business days of the date they pay salary or wages. The old rule — quarterly payments by the 28th day after the end of each quarter — is gone from 1 July 2026.

The Super Guarantee rate also moves from 11.5% to 12% on 1 July 2026, the final step in the legislated schedule under the Superannuation Guarantee (Administration) Act 1992. That means every super calculation your payroll software runs from 1 July must use 12%, not 11.5%. Running the wrong rate on even one pay run creates an SG shortfall, which triggers the ATO's Superannuation Guarantee Charge — a penalty that is not tax-deductible, unlike ordinary SG contributions.

For a business running weekly payroll, Payday Super means up to 52 super payment events per year instead of 4. For fortnightly payroll, that's 26 events. Each one has a 7-business-day window. Miss the window and the ATO can impose an SGC shortfall interest charge currently set at the ATO's general interest charge rate (10.26% per annum as at June 2026) plus an administration fee of $20 per employee per quarter. The compliance burden is real — and it's why payroll automation has stopped being optional for businesses with any employees at all.

DEADLINE: Your first Payday Super obligation falls on the 7th business day after your first pay run on or after 1 July 2026. If you run payroll on 4 July, super must hit the fund by 13 July 2026. There is no grace period.

Payday Super — key numbers at a glance

Super rate increases from 11.5% to 12% on 1 July 2026
7 business days from payday — the new super payment window
SGC shortfall interest rate: 10.26% per annum (ATO general interest charge, June 2026)
SGC administration fee: $20 per employee per quarter if late
SGC penalties are NOT tax-deductible — unlike ordinary super contributions
Quarterly super payments are abolished — no transitional period applies

Change 2 — Minimum Wage Increase: New Rates Apply From the First Pay Period on or After 1 July 2026

The Fair Work Commission hands down its Annual Wage Review decision each year under Part 2-6 of the Fair Work Act 2009, and the new rates take effect from the first full pay period starting on or after 1 July 2026. For 2026, the Commission has flagged a wage increase in line with inflation and productivity benchmarks — the specific percentage will be confirmed in the final determination, but based on recent years (3.75% in 2024, 3.5% in 2025), businesses should model at least 3%–4% across all award rates.

This matters because the minimum wage increase flows through every modern award automatically. If you employ anyone under the General Retail Industry Award, the Hospitality Award, the Cleaning Services Award, the Building and Construction Award, or any of the other 100-plus modern awards, your pay rates must update from the first pay period that begins on or after 1 July. Paying the old rate is an underpayment under the Fair Work Act 2009 — even by one cent per hour — and can result in a compliance notice, a fine of up to $18,780 per contravention for an individual, or $93,900 for a body corporate.

The national minimum wage (for award/agreement-free employees) and all award minimum wages move simultaneously. As of the 2025–26 year, the national minimum wage is $24.10 per hour ($915.90 per week). The 2026–27 figure will be announced by the Fair Work Commission before 30 June 2026. Check the Fair Work website (fairwork.gov.au) or your payroll platform's award library for the confirmed new rates the moment they're published. SAB Account AI updates its award rate library on 1 July so the correct rates apply automatically from the first pay run.

ACTION REQUIRED: Log into your payroll platform before 1 July 2026 and confirm it has applied the new award rates to your employees' classifications. Do not assume it updates automatically unless your provider has confirmed this in writing.

Minimum wage — what to check before 1 July

New rates apply from the first full pay period starting on or after 1 July 2026
Current national minimum wage (2025–26): $24.10/hour or $915.90/week
100+ modern awards update simultaneously — check your specific award
Underpayment penalty: up to $93,900 per contravention for a body corporate
The Fair Work Commission publishes updated pay guides at fairwork.gov.au

Change 3 — Single Touch Payroll Phase 2: No More Deferrals, Full Reporting Required

Single Touch Payroll Phase 2 (STP2) was introduced by the ATO to replace the old end-of-year payment summary process with real-time, disaggregated payroll reporting. Phase 2 expanded the data employers must report on every pay event — separating gross wages into distinct income types (salary, allowances, overtime, bonuses, directors' fees), reporting each employee's tax treatment code, and including child support deductions. The ATO granted deferrals to many payroll software providers and employer groups through 2023, 2024, and 2025.

From 1 July 2026, all remaining STP2 deferrals expire. Every employer — regardless of size, software, or industry — must report in full STP2 format from 1 July 2026. If your payroll software does not support STP2 reporting, you are non-compliant from your first pay run of the new financial year. The ATO can issue failure-to-lodge penalties of $313 per 28-day period (for a base penalty unit in 2026) for each missed or incorrect STP report.

The practical implication: if you are still on an older payroll platform, using manual STP reporting through a tax agent, or — worse — not lodging STP at all, 1 July 2026 is a hard stop. You need a platform that files STP2 events automatically after each pay run. SAB Account AI files STP2 reports directly with the ATO on every pay event, so small business owners don't need to think about disaggregation codes or income type mapping.

CHECK NOW: Ask your payroll provider whether it currently files STP Phase 2 reports (not Phase 1). If they say 'we're still transitioning' — you have 15 days to switch platforms. SAB Account AI is STP2-compliant from day one.

STP2 — non-negotiable from 1 July 2026

All STP2 deferrals expire 1 July 2026 — no extensions available
STP2 requires disaggregated income reporting: salary, allowances, overtime reported separately
Failure-to-lodge penalty: $313 per 28-day period per missed STP event (2026 penalty unit rate)
Every pay run must generate an STP2 report filed with the ATO in real time
Payment summaries (group certificates) are replaced by ATO Income Statements — employees access these via myGov

Why These Three Changes Hitting Together Creates a Cash Flow Problem — and What to Do About It

Before 1 July 2026, a business running fortnightly payroll could pay quarterly super, hold that cash for up to 13 weeks, and use it as working capital. From 1 July, that float disappears. Every fortnight, within 7 business days, super must leave your bank account. For a business with 5 employees each earning $65,000 per year, the quarterly super bill was roughly $7,475 (at 11.5%). Under Payday Super at 12%, that same obligation hits in 26 smaller payments of ~$300 each — but the cash is gone 26 times a year instead of 4.

At the same time, the minimum wage increase adds to every pay run — estimate 3%–4% higher gross wages for award-covered employees from 1 July. Combined with the 0.5 percentage point super rate increase, the total employment cost uplift could be 3.5%–5% on your current wage bill from 1 July. A business with a $300,000 annual wage bill should model an additional $10,500–$15,000 in annual employment costs from the new financial year.

The practical response is straightforward: calculate your new per-pay-period super liability now, set up a separate bank account or sub-account earmarked for super, and fund it every payday before touching the remainder. Do not wait until you receive an ATO notice. The SGC is more expensive than the original contribution because it includes interest, administration fees, and is not deductible. SAB Account AI's payroll dashboard shows your super liability in real time on every pay run so you always know what is owed and when it must be paid.

CASH FLOW MODEL: Take your current quarterly super bill, divide by 6 or 7 (for fortnightly or weekly payroll cycles), and treat that amount as a non-negotiable weekly outgoing from 1 July. Build it into your cash flow forecast before the new financial year starts.

The Xero Price Increase Factor: Why 1 July 2026 Is the Right Time to Review Your Payroll Platform

Xero has confirmed a price increase effective 1 July 2026 across its Australian subscription tiers. For small businesses already stressed by Payday Super cash flow changes and the minimum wage uplift, a simultaneous software cost increase is the third pressure point in the same 30-day window. Xero's Starter plan moves from $29/month to $35/month, the Standard plan from $60/month to $70/month, and the Premium plan from $85/month to $99/month — increases of between 17% and 21% on current pricing.

This creates a genuine decision point. If you are paying $70–$99 per month for accounting software but only using payroll and invoicing features — which is the reality for most sole traders and small businesses with fewer than 10 employees — you may be significantly overpaying. SAB Account AI is purpose-built for Australian sole traders and small businesses, covering payroll (STP2, Payday Super at 12%, award rate updates), invoicing, and BAS preparation at a fraction of enterprise accounting software pricing.

The migration question is practical: how long does it take to move payroll data to a new platform? For most small businesses, the answer is one to two hours. Employee records, YTD figures, and super fund details can be imported or re-entered quickly. The key is to migrate before 1 July so your first STP2 pay run of the new financial year is filed from your new platform — not split across two systems. sabaccountai.com has a guided onboarding process that walks you through the migration in a single session.

MIGRATION WINDOW: You have until 30 June 2026 to migrate payroll platforms without creating a split-year STP2 reporting problem. Starting on 1 July mid-year creates additional complexity with YTD figures. Move now, not later.

Your 15-Day Compliance Checklist Before 1 July 2026

With 15 days until the deadline, there is still time to get compliant — but not time to delay. Work through the following actions in order of urgency.

First, update your super rate to 12% in your payroll software today. Do not wait until 1 July to change this. If your system does not update automatically on the correct date, set a calendar reminder for 1 July at 7am and change it manually before running any pay. Second, confirm your payroll platform files STP2 — not STP Phase 1. Log in, find the STP settings, and look for 'Phase 2' or 'STP2' confirmation. If it says Phase 1 or is ambiguous, contact your provider immediately. Third, pull your current award rate schedule and look up the Fair Work Commission's updated rates when they're published (expected by 20 June 2026 at fairwork.gov.au). Update every employee classification before the first July pay run.

Fourth, calculate your new per-pay-period super liability using the 12% rate and set up your bank transfer workflow to ensure super reaches the fund within 7 business days of each payday. Fifth, model your new total employment cost from 1 July — wages at new award rates plus 12% super — and update your cash flow forecast for FY2026–27. Sixth, if your current payroll software does not support Payday Super automation, STP2 filing, or automatic award rate updates, visit sabaccountai.com to explore a platform built specifically for these obligations.

PRIORITY ONE: The 12% super rate and 7-business-day payment window are not platform features — they are legal obligations. If your payroll tool doesn't enforce both automatically from 1 July, you carry the compliance risk personally.

15-day action checklist — do these in order

Update super rate to 12% before your first July pay run
Confirm STP2 (not Phase 1) compliance with your payroll platform
Check Fair Work Commission website for updated award rates — expected by 20 June 2026
Set up a 7-business-day super payment workflow for every pay cycle
Recalculate total employment costs at new rates and update your FY2026–27 cash flow forecast
If your platform doesn't automate these — migrate to one that does before 30 June

Run your first Payday Super-compliant pay run before 1 July 2026 — SAB Account AI handles the 12% rate, 7-business-day payment window, and STP2 filing automatically at sabaccountai.com.

SAB Account AI — ATO-compliant invoicing and payslips for Australian small businesses. From $9/mo.

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Frequently asked questions

When does Payday Super start in Australia?

Payday Super starts on 1 July 2026. From that date, employers must pay superannuation to a complying fund within 7 business days of each payday under the Treasury Laws Amendment (Payday Super) Act 2026.

What is the super guarantee rate from 1 July 2026?

The Super Guarantee rate increases from 11.5% to 12% on 1 July 2026 — the final step in the legislated schedule under the Superannuation Guarantee (Administration) Act 1992. This rate applies to all ordinary time earnings for eligible employees.

What happens if I pay super late under Payday Super?

If you miss the 7-business-day window, the ATO can impose the Superannuation Guarantee Charge, which includes the original shortfall, an interest charge (currently 10.26% per annum), and a $20 per employee per quarter administration fee — and unlike ordinary super contributions, the SGC is not tax-deductible.

What is the new minimum wage from 1 July 2026 in Australia?

The Fair Work Commission will confirm the new national minimum wage before 30 June 2026. The current rate (2025–26) is $24.10 per hour or $915.90 per week — the new rate applies from the first full pay period starting on or after 1 July 2026.

Do I still need to file STP from 1 July 2026?

Yes — and from 1 July 2026, all employers must file in Single Touch Payroll Phase 2 (STP2) format with no remaining deferrals. STP2 requires disaggregated income reporting, separating salary, allowances, and other income types on every pay event.

Does Payday Super apply to sole traders with no employees?

No — Payday Super only applies to employers paying wages to employees. Sole traders with no employees have no SG obligation for themselves, but if they pay any workers classified as employees, Payday Super applies from 1 July 2026.

How do I calculate my new super liability under Payday Super?

Multiply each employee's ordinary time earnings per pay period by 12% — that is the super amount due within 7 business days of that payday. For a fortnightly employee earning $2,500 per fortnight, the super liability per fortnight is $300.

Which payroll software handles Payday Super automatically in Australia?

Payroll platforms that automate Payday Super must calculate super at 12%, schedule fund payments within 7 business days of each payday, and file STP2 reports with the ATO per pay event. SAB Account AI (sabaccountai.com) is built to handle all three requirements for Australian sole traders and small businesses.