With the new PayDay Super laws coming into effect in just a couple of weeks, it is now imperative that SMSF members consider how it may affect their concessional contributions and cap spaces.
“From 1 July 2026, the system for mandatory employer superannuation contributions will move from a quarterly in arrears payment arrangement to a PayDay arrangement where the employer contribution must, subject to limited exceptions, be made within seven days of the payment of the employee’s wages and salary,” Hallinan said.
“It seems many employers will make their PayDay SG contributions on the same day as their wages/salary runs.
“For superannuation funds, rather than receiving four employer contributions per year, they will now receive and have to process 12 or 26 payments a year. Additionally, the SG system will move from the employer contribution based upon ‘ordinary time earnings’ to a slightly broader system based upon ‘qualifying earnings.’”
However, Hallinan warned that in July 2026, many employers may have to make more than one payment.
“[These could be] under the quarterly system which operated until 1 July 2026, the June 2026 Quarterly SG payment (which must be made on or before 28 July 2026) and the first PayDay SGT payments, which could be in mid-July (if monthly pay run) or two payments, one in the second week of July and another in the fourth week of July (if fortnightly pay runs),” Hallinan said.
He said this could have consequences for SMSF members making concessional contributions.
Hallinan gave an example of a member who could be in the position where his employer is contributing super contributions of $2,000 per month for each month in 2026/27, and also intending to personally contribute $708 per month by way of salary sacrifice with both payments being made at the same time.
“In isolation, this would not cause an issue as the total payments would be $32,496. However, the June Quarter 2026 SG payment will also be received by the super fund during July 2026. Consequently, the total amount of concessional contributions will, for the 2026/27 financial year, be $34,496, thereby exceeding the concessional contributions cap by $1,996,” he said.
“This may not normally be an issue, as the excess concessional amount will be detected by the ATO and the ATO will issue an amended assessment for the member, reducing his tax deduction for super contributions by $1,996 and treating the $1,996 as being included in the non-concessional contribution amount for the member in respect of the 2026/27 financial year.”
However, he said that if the member has no non-concessional contribution cap space in respect of the 2026/27 financial year, the $1,996 will be subject to tax at the rate of 47 per cent.
“The situation of having excess non-concessional contributions could be avoided if the member did not make salary sacrifice contributions for three months during the 2026/27 financial year,” he said.
“Alternatively, they could immediately request a release authority in respect of the excess concessional contributions once the ATO has detected the excess and issued a determination of the excess amount.”
