One of the most common payroll mistakes Australian employers make isn’t underpaying wages; it’s mishandling superannuation. Super errors often go unnoticed for months or years, until an ATO review, employee complaint, or payroll audit uncovers unpaid amounts, interest, and penalties that quickly add up.
With super now moving to a payday-based system, getting it wrong is becoming more expensive and harder to fix. This guide explains what employers need to do, why mistakes happen, and how to stay compliant without adding complexity to your payroll process.
Recommended Reads
- The Complete Guide to the Australian Payroll System
- Understand Single Touch Payroll (STP) and Your Obligations
- Payday Super is Coming – Are You Ready?
- Fair Work Compliance Essentials for Payroll Teams
- How to Avoid Common Payroll Mistakes in Australia
- ATO’s Role in Payroll: Audits, Penalties & Best Practices
- Integrate Payroll & HR for Full Compliance
- Payroll Recordkeeping and Data Security Requirements
- Award Interpretation Automation Explained
Understanding Your Superannuation Obligations
Superannuation is governed by the Superannuation Guarantee (SG) rules, which apply to almost every employer in Australia. These obligations are non-negotiable and are closely monitored by the ATO.
As an employer, you must pay super for eligible employees, including:
- Full-time, part-time, and casual employees
- Employees aged 18 and over, regardless of how much they earn
- Employees under 18 who work more than 30 hours per week
A common mistake is assuming casual or short-term staff are exempt. In reality, most payroll-related super errors occur because eligibility rules are not reviewed regularly or payroll settings have not been updated.
Use the Super Guarantee eligibility tool from the ATO to confirm whether an employee is eligible.
Paying the Correct Super Rate
From 1 July 2025, the Super Guarantee rate is 12% of an employee’s ordinary time earnings (OTE). This is the final scheduled increase under current legislation.
Key points employers often miss:
- Super is calculated on OTE, not total earnings
- Some allowances and loadings may be included in OTE
- Overtime is generally excluded, but misclassification is common
Incorrect earnings categorisation is one of the biggest causes of underpaid super, especially in award-heavy sectors like NDIS, healthcare, and community services.
For guidance on which payments count as ordinary time earnings (OTE) or salary and wages for super, follow this link to the ATO Website:
List of payments that are ordinary time earnings | Australian Taxation Office
Default Funds and Employee Choice
Employers must give eligible employees the opportunity to choose their super fund during onboarding. If no fund is nominated, contributions must be paid into a MySuper-authorised default fund.
Common compliance issues include:
- Not issuing a choice of fund form
- Paying into a non-MySuper product
- Continuing to pay into an old fund after an employee nominates a new one
These mistakes often happen when onboarding is rushed or handled outside the payroll system.
To know in detail about setting up super for your business, click the link below:
Setting up super for your business | Australian Taxation Office
Record-Keeping Isn’t Optional
ATO compliance relies heavily on records. Employers must keep clear and accessible records that show:
- How super was calculated for each employee
- Super amounts paid per employee and the period covered
- Payment dates
- Super fund or clearing house details
- Confirmation that contributions were successfully paid (such as receipts or payment confirmations)
Missing, incomplete, or unclear records can turn even a small super error into a compliance breach, even where contributions were paid on time.
Super Payment Deadlines: What’s Changed
Until 30 June 2026, employers may still pay superannuation quarterly. From 1 July 2026, Australia moves to payday super, requiring contributions to be paid in line with each pay cycle.
Until June 2026, quarterly deadlines are:
- 28 April for January–March
- 28 July for April–June
From July 2026 onwards:
- Super must be paid each payday
- Contributions must reach the employee’s fund within 7 business days of payday
- Cash flow timing becomes critical
Many employers underestimate the disruptive impact this change can have without system automation.
What Happens If Super is Paid Late
Late super payments trigger the Super Guarantee Charge (SGC), which is far more punitive than many employers realise. The rules differ slightly depending on whether contributions are paid quarterly (until June 30, 2026) or on a per-payday basis (from July 1, 2026).
Until 30 June 2026 (Quarterly Super):
The SGC includes:
- The unpaid super amount
- 10% interest on the shortfall
- A $20 administration fee per employee per quarter
- Loss of tax deductibility for the contribution
From 1 July 2026 (Payday Super / per QE day):
Under the payday super, the SGC is calculated and assessed per qualifying earnings (QE) day, which is effectively each payday. The charge consists of:
- Any individual SG shortfall remaining after on-time and late contributions
- Notional earnings components, if applicable
- Administrative uplift amounts
- Choice loadings, if any
Even genuine mistakes can result in thousands of dollars in additional costs, particularly for businesses with large, casual-heavy, or award-covered workforces. With Payday Super, timeliness is critical; late or missed payments are immediately non-compliant, and the SGC is assessed per pay run rather than per quarter.
Why Super Clearing Houses Matter
Super must be paid through an electronic super clearing house to meet SuperStream requirements. This is not optional.
Clearing houses allow employers to:
- Make one payment covering multiple employees and funds
- Receive confirmation that payments reached each fund
- Maintain digital records for audits and reviews
Common options include:
- Commercial super clearing houses
- Industry fund clearing houses
- Payroll platforms with built-in clearing house functionality
The ATO’s Small Business Superannuation Clearing House has been closed to new users and will be fully retired by 30 June 2026, meaning employers still using it must transition to an alternative solution.
To avoid processing delays and ensure a seamless transition, employers should begin migrating to a modern payroll or commercial clearing house solution well before the SBSCH's final retirement date.
Manual fund-by-fund payments increase the risk of errors, delays, and missing records.
How Payroll Software Reduces Super Risk
Super compliance failures rarely happen because employers don’t care. They happen because manual processes break under pressure.
Modern payroll software addresses the most common risk points by:
- Automatically calculating super on correct OTE definitions
- Applying updated SG rates without manual intervention
- Scheduling super payments in line with pay runs
- Integrating directly with compliant clearing houses
- Storing digital audit trails for every contribution
With payday super becoming mandatory, payroll systems are no longer just helpful; they are essential infrastructure.
Common Super Mistakes Employers Make
Across payroll audits and compliance reviews, the same issues appear repeatedly:
- Paying super late but assuming it can be “fixed later”
- Misclassifying earnings and underpaying OTE
- Forgetting to update payroll settings after legislative changes
- Poor record-keeping or lost receipts
- Relying on spreadsheets instead of payroll systems
Understanding these patterns helps employers prevent issues before they escalate.
Practical Super Compliance Checklist
Use this quick self-review to assess your current setup:
- Are all eligible employees receiving super, including casuals?
- Is super calculated correctly on OTE, not total earnings?
- Are you using the correct 12% SG rate?
- Are super payments made on time and via a clearing house?
- Are digital records stored and easy to access?
- Is your payroll system ready for Payday Super in July 2026?
If you hesitate on any of these, there is likely a compliance gap worth addressing now.
Conclusion
Superannuation is no longer a background payroll task. With increased enforcement, greater employee awareness, and the shift to payday super, it has become a frontline compliance issue for Australian employers. The businesses that manage super well are not doing anything complex; they are simply using the right systems, reviewing their processes regularly, and removing manual risk.
Getting super right protects your business, supports your employees, and keeps payroll running smoothly as regulations continue to evolve.
