Our audit team undertakes the complete range of audits required of Australian accounting laws to help you to help you meet obligations or fulfil best practice procedures.
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Our team advises at all stages of a litigation dispute, taking an independent view while gathering and reviewing evidence and contributing to expert reports.
Our M&A team works with clients to achieve a full or partial sale of their business, to ensure achievement of strategic ambitions and optimal outcomes for stakeholders.
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Our finance and funding team works to access sources of finance, present your case to potential funders and negotiate a long-term sustainable relationship.
We provide effective and strategic corporate finance services across all stages of investments and transactions so clients can better manage costs and maximise returns.
We work closely with clients and lenders to provide holistic debt advisory services so you can raise or manage existing debt to meet your strategic goals.
Our proven methodology identifies opportunities to improve your processes and optimise working capital, and we work with to implement changes and monitor their effectiveness.
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Our outsourced CFO services provide a full suite of CFO, tax and finance services and advice to help clients manage risk, optimise operations and grow.
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Following the introduction of mandatory sustainability reporting requirements in Australia, organisations will need to understand if they are required to report, the disclosure requirements, and if they have the skill set and available data to comply. We can guide organisations through the reporting process end-to-end, from climate-related risks and opportunities identification through to reporting support.
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The ATO has made it clear that the professional services industry is in the spotlight as we head into 2026. With PCG 2021/4 now fully in effect as of 1 July 2024, the question is no longer if the ATO will review your arrangements, it is now a question of when. Is your firm ready?
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ATO releases PCG 2026/1, confirming its first‑year compliance approach for Payday Super.
The final guideline expands on the ATO’s risk‑based framework and sets clearer expectations for employer behaviour during transition.
With 1 July 2026 approaching, employers must assess payroll readiness, data quality and process controls to ensure compliance.
The ATO has now released PCG 2026/1, finalising its compliance approach for the first year of the Payday Super regime commencing 1 July 2026.
Contents
The PCG confirms that the ATO will take a facilitative approach for employers demonstrating genuine efforts to comply, while still placing strong emphasis on data quality, payment timeliness and internal control frameworks.
At the same time, several broader implementation issues remain uncertain, including potential inadvertent breaches of concessional contribution caps during the transition, and pay‑cycle scenarios that may unintentionally trigger overpayment of Superannuation Guarantee (SG). These are areas where employers need to proceed carefully, and where further legislative refinement may still occur.
Background
The ATO released a draft PCG in late 2025 and sought feedback from industry. Following consultation, the final PCG 2026/1 incorporates refinements and additional examples to help employers understand how the ATO will apply its risk‑based compliance model during the first 12 months.
The ATO continues to acknowledge that employers face significant system, process and timing changes under Payday Super, but also emphasises that SG must be accurately calculated and received by funds within seven business days from pay day.
PCG 2026/1 – ATO’s first‑year compliance intent
Under PCG 2026/1, the ATO’s compliance focus will centre on three risk categories:
Low risk – Employers who pay contributions on time, act transparently, and demonstrate strong controls and timely remediation.
Medium risk – Employers making genuine efforts to comply but experiencing occasional delays or inconsistencies in processes.
High risk – Employers with repeated late payments, incorrect earnings calculations or limited engagement with ATO expectations.
The PCG emphasises that employers in the low‑risk zone will not be the focus of compliance action, reinforcing the benefits of investing early in up‑front controls, governance and testing.
Key clarifications in the final PCG
The ATO has confirmed it will apply a risk‑based compliance model, assessing employers against payment timeliness, accuracy of Qualifying Earnings and responsiveness to issues.
Nine expanded examples demonstrate how employers may move between risk zones throughout the year, based on behaviour and remediation.
The ATO will adopt a supportive approach toward employers who demonstrate genuine efforts to comply, including prompt rectification of errors and well‑documented internal processes.
The PCG places heightened emphasis on data quality, including correct fund details, STP alignment and effective bounce‑back procedures.
The ATO reiterates that relying on clearing houses or payroll service providers does not shift employer responsibility.
Additional emerging issues affecting transition
Below are some outstanding matters raised during the consultation process for Payday Super, which were not addressed in the PCG and remain areas where further ATO or legislative clarification would be beneficial.
Industry concerns have been raised that the timing shift under Payday Super, especially during the transition year, may cause some individuals to breach their concessional contributions cap purely due to timing, rather than because of increased employer contributions.
Stakeholder commentary has suggested that the Commissioner may need to apply discretion to disregard certain excess contribution amounts, particularly where the breach arises only because SG is now paid earlier than under the quarterly regime.
Government representatives have now indicated that legislative amendments are being considered to ensure employees are not adversely affected by inadvertent timing‑based cap breaches during the transition.
Some employers pay wages monthly, with half paid in advance and half in arrears. Under Payday Super, SG must be paid on each payday based on the Qualifying Earnings for that pay event.
This raises a new practical challenge:
If the employee resigns after payday but before the end of the month, the employer may have already overpaid superannuation on earnings the employee ultimately did not accrue.
Whilst overpaid salary and wages can typically be offset against other amounts paid on termination, SG amounts paid to funds cannot simply be reversed unless the contribution meets strict refund rules (which generally do not include ‘employee resigned earlier than expected’).
This scenario exposes a real operational risk under Payday Super for employers with advance pay cycles, and employers may wish to restructure such arrangements where this is possible.
Moving forward
Employers should review whether their systems and processes are ready to support:
SG being received by funds within seven business days of pay day.
Accurate Qualifying Earnings calculations per pay cycle.
Robust controls to detect timing errors, overpayments and bounce‑backs.
STP and SuperStream alignment to reduce discrepancies in ATO data‑matching.
Given the new timing requirements and increased ATO visibility, early preparation remains critical. Whilst pressure is on the payroll software providers, employers must also take responsibility for readying their internal processes and controls.
How can we help?
Grant Thornton can assist with a detailed review of SG settings, payroll processes and the application of Qualifying Earnings. Typical areas of risk include:
Incorrect treatment of allowances.
Misclassification of annual leave loading.
Workers compensation payments not linked to work status.
Penalty rates incorrectly treated as overtime.
We also support employers with SG recalculations, process reviews and readiness assessments designed to ensure alignment with PCG 2026/1.
You can also register here for our webinar: FBT and Payday super update, to be held on 24 February 2026.
If you require assistance, please reach out to Elizabeth Lucas or your usual Grant Thornton advisor.
Superannuation Guarantee – recent announcements on Payday Super
The long-awaited guidance from the ATO on a simple method for determining the home charging cost of electricity for plug-in hybrid vehicles (PHEVs) has been released. This comes in the form of a draft update to Practical Compliance Guideline PCG 2024/2.
The Treasury Laws Amendment (Payday Superannuation) Bill 2025 has now been introduced into the House of Representatives, with very little change to the original draft released for consultation
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