Compliance
Payday Super & Division 296: What Employers And High-Balance Members Must Know
Major superannuation reforms are arriving: Payday Super changes from 1 July 2026 and Division 296 tax applies to those with over $3 million in super. Employers and members must get compliant fast.
By NomadicTax Research Team • 5 min read • June 25, 2026
## Key Reforms
- **Payday Super**: From 1 July 2026, employers must pay super guarantee on payday (not quarterly) based on a new measure of **qualifying earnings**. Super funds must receive payments within 7 business days unless an extended timeframe applies. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/PaydaySuper?utm_source=openai))
- **Division 296 tax**: Begins in the 2025-26 financial year for individuals with a **Total Super Balance (TSB)** over **$3 million**. Earnings attributable to amounts above that threshold will be taxed at **15% on those earnings**. ([ato.gov.au](https://www.ato.gov.au/api/public/content/0-1ef514f7-8f71-4ac2-889f-6fb8d0600df6?utm_source=openai))
## Implications for Employers
- Update payroll systems to calculate qualifying earnings correctly under Payday Super.
- Ensure super payments are timed with paydays and transferred within the shorter windows.
- Prepare for increased reporting and fund validation processes; verification required for new employees and stapled super arrangements. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/PaydaySuper?utm_source=openai))
- SBSCH (Small Business Superannuation Clearing House) closes 30 June 2026. Businesses must choose alternative payment tools and download transaction history. ([ato.gov.au](https://www.ato.gov.au/businesses-and-organisations/super-for-employers/paying-super-contributions/how-to-pay-super/small-business-superannuation-clearing-house?=redirected_sbsch&utm_source=openai))
## Considerations for High-Balance Members
- If your TSB exceeds **$3 million**, review where your fund is invested and understand how earnings on amounts above this are taxed. These earnings attract Division 296 tax, in addition to existing fund taxes. ([ato.gov.au](https://www.ato.gov.au/api/public/content/0-1ef514f7-8f71-4ac2-889f-6fb8d0600df6?utm_source=openai))
- Defined benefit plan members should know earnings are taxed after benefits are paid, with certain transitional deferrals. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/sites/default/files/2026-02/PLS_working_group_key_outcomes_20_January_2026.pdf?utm_source=openai))
- Use the 2025-26 period to assess whether it is possible to restructure or reduce super balances if near threshold.
## Examples
**Employer**: Company X pays salaries monthly. They must now match super payments on each payday and ensure completeness and correct calculation of qualifying earnings.
**Member**: Jane has a $4 million TSB in 2025-26. Earnings above $3 million will be taxed at 15% under Division 296. She may consider adjusting contributions or withdrawing (if eligible) to minimize impact.
## Steps to Take Now
1. Audit your superannuation balances and projections.
2. Employers: implement payroll software updates, staff training.
3. Individuals: calculate potential Division 296 liability; explore options for fund rebalancing or withdrawal if needed.
4. Stay informed on draft rulings and transitional arrangements from ATO as guidance finalises.
These reforms shift both responsibility and opportunity, especially for those with large super accounts or complex employment arrangements. Preparing now can avoid unexpected tax liabilities and ensure smooth compliance.