“The ATO is consulting on its approach to compliance for the 12 months after the change starts. The ATO’s approach will differentiate between low and high-risk employers,” Chalmers said.

“This approach will mean that employers who are making the effort to pay contributions in line with each pay cycle can fall into the low-risk category.”

Only last week, industry and association bodies, including the SMSFA and the Institute of Public Accountants, were calling for a more “pragmatic and phased” approach to the law.

Peter Burgess, chief executive of the SMSFA, told SMSF Adviser the association was 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.”

However, the legislation passed through the Senate with no amendments.

Burgess said although the SMSFA supports pay day super it is disappointed the concerns of small business have not been heard.

“For small business owners, many of whom are SMSF trustees, aligning the payment of wages and salaries with the payment of SG contributions will require major changes to payroll systems, cash flow processes and clearing house arrangements, and eight months is simply not enough time,” he said.

“Within the bounds of the now passed legislation, we will continue to push for an implementation timetable that appropriately recognises the challenges faced by many small business owners, and which supports the intent of the pay day super legislation.”

Daniel Butler, director of DBA Lawyers, said the new laws will have “substantial ramifications” for employers.

“My thinking from what I am picking up from clients is that pay day super is likely to be a disaster for many SMEs,” he said.

“As confirmed by the Assistant Treasurer, Daniel Mulino, at last Friday’s National Super Convention in Sydney, the government wanted to fast track the PDS legislation so that digital service providers can start their work as they were not willing to make costly system changes until the legislation was passed as law.”

Butler said the government is providing no transition period so the law will apply as per the legislative provisions from 1 July 2026.

“However, the government has been communicating with the ATO on the issue of a practical compliance guideline where the ATO will not strictly enforce the PDS provisions in the first 12-month period. This defies the rule of law and is the wrong way of going about introducing new legislation,” he said.

“The best practice to make sure the law will be implemented properly is to fix the systems, finalise the law, then require employers to comply with measures that are capable in practice of complying with such as making sure the software and systems will consistently provide for transfers within a seven-day payment period. An ATO PCG provides no protection to employers who will be in breach of the law.”

Butler said there are many concerns with the legislation including that the current payment systems do not allow many employers to confidently and consistently transfer money within that seven-business day period.

“Recent evidence obtained from a number of employers suggests that the current payment protocols and system are taking somewhere between five to 11 days. Without a significant improvement to the current DPS, electronic funds transfer and related systems to ensure that there can be substantially quicker transfer of data and payment systems, the proposed seven-day timeline will set employers up to fail with associated substantial penalties,” he said.

“Moreover, some employers are not even given any data on when the super monies are received by the receiving fund on an employee-by-employee basis and therefore cannot even self-assess what period exposure they would have.”

Furthermore, he said, employers should not be responsible for matters totally outside their control such as the payment and transfer systems, incorrect TFNs by employees, choice of fund switches, scammers, and if an employee’s SMSF changes bank accounts and their details are removed from the Super Lookup register.

“While employers have been responsible for matters outside their control under the Superannuation Guarantee (Administration) Act 1992 (Cth), at least they had 28 days from the end of each quarter to comply with such obligations,” he said.

“However, seven days to correct these issues is far too short. Thus, as proposed by the Institute of Financial Professionals Australia there is merit in changing to a payment approach where the employer’s responsibility is to pay within seven-days of paying wages and relieve them of all the other issues that can go wrong that are outside their control.”

Butler added that employers will need to work with their advisers to implement costly and substantial system changes that will be needed to minimise the risk of being put out of business with hefty penalties and non-deductible interest under the strict timelines and obligations.

“Some incentive should be provided by the government in incurring these costs and undertaking these upgrades as many smaller to medium enterprises are finding the going tough in the current uncertain and difficult economic environment,” he said.

Meanwhile, Super Consumers' Australia warned the government has left a glaring gap in protections by failing to follow through on its commitment to fix the super onboarding process.

Xavier O’Halloran., CEO of SCA, said Payday Super is a major win for consumers, but the reform was meant to do more than stop payment delays.

"It was meant to stop people being influenced into creating duplicate accounts they never wanted, and that part has been dropped," he said.

O'Halloran said Treasury’s own modelling shows that without onboarding reform, super fund advertising during employment setup could lead to 325,000 duplicate accounts every year, draining $224 million in unnecessary fees and insurance premiums.

"The ATO’s most recent statistics show that 20 per cent to 25 per cent of working age people with super have more than one superannuation account," he said.

“The original stapling reforms were supposed to stop this. But onboarding software is actively undermining stapling and this gap in consumer protections gives that behaviour a free pass. The parliament just had the chance to clean up the ‘hot mess’ that is the super onboarding system. Instead, it stopped short and left millions of Australians exposed.”

SCA is calling on the government as part of the legislation to introduce a total ban on super fund advertising during onboarding, make it mandatory for employers to notify employees of their stapled fund upfront, and overhaul onboarding software to comply with the intent of stapling legislation.

"This reform must be finished. Payday Super is the floor, not the ceiling, for a system that should protect people’s retirement savings, not exploit them," O’Halloran said.