Peter Burgess, chief executive of the SMSFA, told SMSF Adviser the association is concerned about the timelines, particularly for small businesses that may not have the resources to adjust to the new requirements in such a short period of time.

“The payment of SG contributions is much more complicated than the payment of salaries and will require changes to systems and processes and changes to cashflow management to ensure sufficient funds are available each pay cycle to pay salaries as well as SG contributions,” he said.

“To provide more time for small businesses, we support a staged implementation process with small businesses granted a longer transition period to adjust.”

Burgess said employers may face difficulties paying SG contributions within the seven days to an SMSF in situations where the status of the fund has changed since the previous pay cycle.

“For example, where an SMSF annual return is two or more weeks overdue, the fund’s regulation details will be removed from Super Fund Lookup, which will then prevent SG contributions being received by the fund,” he said.

“In these scenarios, the solution in the legislation to allow a longer time period for the employer to pay the contribution to another fund should not, in our view, be the only solution. Employers should be given a longer period to pay the SG contributions to the nominated SMSF.”

Tony Greco, senior tax adviser for the IPA, said the government’s decision to press ahead without allowing more time or a staggered rollout ignores the practical realities faced by small businesses.

“We support the policy intent behind Payday Super. But the current timeframe, all-in on 1 July 2026, is simply challenging,” Greco said.

"Paying super is far more complex than paying wages, and anyone who refers to it as simple needs to look under the bonnet to understand the complexities. Payday super will also apply to certain contractors under the extended definition of employees for super guarantee purposes."

He continued that small businesses are not opposed to reform, but they need sufficient time and support to adapt their payroll policies and systems, align with software updates, adjust their cashflow budgets and ensure super payments can flow smoothly through every layer of the system.

“The 270,000 current users of the free ATO’s clearing house, which are all small businesses, will also need time to transition to a commercial clearing house,” he said.

“The move from paying super guarantee quarterly to after each payroll event will impose a significant cashflow impost and additional administrative costs for small businesses as they transition.”

IPA has called on the government to instead opt for a phased implementation, under which larger employers would implement payday super first and allow small employers an extra year to transition.

“The government’s current approach risks creating compliance pressure and unfair penalties for employers who are doing their best to comply,” Greco said.

“Without appropriate timeframes and cost support, the burden on small businesses will be disproportionate, particularly for employers who currently pay their employees weekly.”

Daniel Butler, director of DBA Lawyers, said his firm is already fielding calls from concerned small businesses, and he hoped the government would listen to the concerns of relevant stakeholders as it did with the Division 296 tax.

“This is a disaster for small businesses because there are not adequate systems at work. I have clients showing me their stats, where they have the best software systems in the country, but it's taken between five and 11 days for the money to arrive in the super fund. The government's just setting up employers to fail,” Butler said.

“We have an aggressive government wanting to rush this in on a half-cocked, half-baked idea when the systems aren't there. This is a massive change and to railroad businesses into a system that doesn't just doesn't work is totally unfair.”

Butler added that the PCG issued by the ATO would also not protect employers despite assurances from the Tax Office.

“Employers won’t be off the hook and to suggest that putting forward the PCG for the first 12 months, as a safety blanket, is ridiculous. There's no legal protection under the PCG,” he said.