iscoverWith Payday Super now introduced to parliament and set to take effect from 1 July 2026, the small business body is calling for a more realistic approach.
‘We need more time’: COSBOA pushes back on Payday Super timeline
22 October 2025
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9 minute read
The proposed Payday Super legislation has been widely welcomed by the business, tax and super community, yet the Council of Small Business Organisations Australia (COSBOA) says it lacks “realism”.
When referring to the legislation as lacking realism, COSBOA warned the current timeline and compliance design risked overwhelming small businesses and undermining the intent of the reform.
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COSBOA said overall, it supported the idea and policy of the legislation, but believed more time needed to be allocated to the implementation period, more cost support was necessary and fairer penalties needed to be applied.
Matthew Addison, COSBOA chair, said while the organisation was in favour of Payday Super to ensure workers’ superannuation was paid regularly and transparently, the reality for small businesses was the systems, timeframes and costs had not been properly accounted for.
“We support the intent of Payday Super, but good policy needs to work in practice,” he said.
“Small businesses want to do the right thing, but they need time to prepare, support to manage the compliance costs, and fair treatment when system failures occur that are outside their control.”
On a recent Under the Hood podcast episode, Accurium tax trainer Lee-Ann Hayes said employers would be required to ensure super contributions were made to funds within seven business days, which had changed from the original proposal of seven calendar days.
This was a welcome change according to Hayes, yet COSBOA believed this time period was still too short as the process typically took five to 10 business days.
Addison warned this timeframe was still unworkable without significant upgrades across payroll software, clearing houses, super funds and the Tax Office.
“We’re trying to build a complex new system on foundations that aren’t ready,” Addison said.
“Every payroll provider, super fund and gateway needs to redesign and test their systems before launch, and that takes years, not months. The government’s own papers say it can take up to three years to implement. Right now, we have eight months.”
In terms of its three suggestions – more time, cost support and fair penalties – COSBOA said there needed to be a phased implementation, moving firstly to monthly payments by 1 July 2026 before the full Payday Super was implemented no earlier than 1 July 2030.
Addison said this would allow for payroll and super systems to be built, tested and integrated, and for employers to adapt.
It was also noted that the transition to Payday Super would bring significant new costs for small businesses in the form of increased software subscription fees, additional transaction charges and extra administrative time.
“These costs should not be borne solely by employers or their software providers. The government’s own regulatory impact statement estimates the cost at just $151 per employer per year. The figure is not the reality,” Addison said.
“This is essential national infrastructure. Small businesses and the software developers who enable them should be supported to implement it.”
The body was also calling for a fair change to penalties as under the proposed law employers could face penalties, even when super payments were delayed or rejected for reasons beyond their control.
Addsion noted COSBOA would heavily push for this as a small business that had paid on time and had done everything correctly should not be penalised based on the failure of another part of the system.
In addition to its three ‘big asks’, COSBOA also flagged concern with the ATO’s proposed “voluntary disclosure statement” system and said it wouldn’t integrate with payroll software and would require employers to manually re-enter data to confirm compliance.
“That’s not reducing red tape – it’s doubling it. If the ATO is serious about modernisation, data should flow automatically through employers’ existing payroll systems.”
“This is one of the biggest payroll changes in decades. Small businesses want to get it right – but they need a clear, practical and achievable pathway to do so. Payday Super can be a good reform if it’s built on solid foundations. Let’s take the time to build it properly.”
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