Entity Setup
Entity Setup & Super: How ‘Payday Super’ and High-Balance Concessions Shape Best Structure Decisions
When you’re setting up a business or trust, or owning high super balances, the reforms around 'Payday Super' and super concessions above $3 million are reshaping how entities structure super and tax obligations from 2025-26 onward.
By NomadicTax Research Team • 5-8 min read • May 13, 2026
## Key policy changes affecting entity structuring
- **Payday Super**: From **1 July 2026**, employers will be required to pay their employees’ superannuation guarantee contributions **at the same time as each salary or wage payment**. ([ato.gov.au](https://www.ato.gov.au/about-ato/new-legislation/in-detail/superannuation/payday-superannuation?utm_source=openai))
- **Reduction of super concession for high balances**: From **1 July 2025**, individuals with **total super balances over $3 million** will face reduced tax concessions on the earnings portion that exceeds that threshold. The effective tax rate increase will apply to those earnings. ([ato.gov.au](https://www.ato.gov.au/about-ato/new-legislation/in-detail/superannuation/non-arm-s-length-income-changes-for-superannuation-funds?utm_source=openai))
## How this impacts entity setups and trusts
- Start-ups and small businesses must ensure payroll systems can handle **simultaneous wage + SG payments**, especially if using payroll software or engaging external providers.
- Trust structures: beneficiaries who accumulate super balances over $3 million need to consider **after-tax investment strategies** vs retaining all assets in super to avoid reduced concession.
- Entities acting as employers must ensure compliance with the increased frequency and timing of super guarantee payments to avoid SG charge risks.
## Practical structuring examples
- **Small business employer**: Lisa operates a small tourism business. With Payday Super coming into effect mid-2026, she updates her payroll provider so each time she pays wages, super is remitted on the same date. This avoids future penalties and cash flow misalignments.
- **High net worth individual**: Brad has multiple super accounts and investments; his combined super is expected to exceed $3 million. He reviews allocations, considers shifting some growth-asset investment to taxable investments outside super if earnings concession is progressively reduced.
## Compliance tips & due diligence
- Review your payroll and accounting systems to ensure they can support more frequent super contributions and real-time payment tracking.
- For beneficiaries of trusts or corporate entities with high net worth, monitor total super balance — some reporting and tax obligations hinge on thresholds.
- Seek professional advice for cross-jurisdiction issues if any entities are foreign-owned or structured offshore.
## Action steps for entity setup now
- When forming a new entity, incorporate in documentation the mechanisms for **contemporaneous super payments** — this could affect cash flow and contracts with employees.
- Use projections to estimate super balance growth and when you may cross the $3 million threshold. Strategize diversification where possible.
With these changes, entity structures need to anticipate timing, super obligations, and evolving tax concessions — setting up early with compliance in mind can mean savings and avoid costly corrections down the track.