David Xuereb | Senior Consultant, Australian Payroll Association
Every end of financial year brings a familiar sense of pressure for payroll professionals: closing out one year while preparing for the next.
Beyond reconciling year-to-date figures and meeting reporting obligations, payroll teams must also ensure that legislated updates, system changes, rate adjustments, threshold movements and compliance requirements are correctly reflected before the first pay run of the new financial year.
For payroll teams, the 2026–27 financial year requires navigating one of the most significant years for changes in some time. With the arrival of Payday Super, updated award and tax rates, continual STP obligations and changes to Paid Parental Leave entitlements, there is a lot to understand, prepare for and embed into day-to-day payroll operations.
Key Changes from the 1st of July
- Payday Super — from quarterly to real-time. The single biggest change in this year’s legislative calendar is Payday Super, which takes effect from 1 July 2026. From that date, employers are required to pay superannuation guarantee contributions within 7 business days of each payday — replacing the quarterly payment cycle that has been in place for decades.
- Changes to the capping of the Maximum Contribution Base and what counts as super-eligible earnings: The concept of “qualifying earnings” (QE) replaces ordinary time earnings (OTE) as the method to base the Maximum Contributions Base (MCB). The MCB also changes from a quarterly amount to an annual amount. Payroll teams that have not yet reviewed their super calculation logic should do so before 1 July.
- STP reporting obligations: From 1 July, STP reporting expands to include qualifying earnings alongside super liability, a change from reporting either OTE or super liability. Make sure your payroll software supports this updated reporting structure and that your STP finalisation declaration for 2025–26 is lodged by 14 July.
- Award rate increases: The Fair Work Commission’s Annual Wage Review decision takes effect from the first full pay period on or after 1 July. For employees on annualised salary arrangements, check that those salaries still absorb all award entitlements including penalties and loadings.
- Tax rate changes — updated PAYG withholding tables: From 1 July 2026, the second personal income tax bracket reduces from 16% to 15% on taxable income between $18,201 and $45,000. This means anyone earning $45,000 or more will save up to $268 per year compared to current rates. For payroll teams, the practical obligation is straightforward: confirm your payroll software has applied the updated 2026–27 ATO tax withholding tables before processing the first July pay run.
- Paid Parental Leave extended to 26 weeks. The government-funded PPL scheme reaches its full 26-week entitlement from 1 July 2026, up from 24 weeks. PPL is paid at the National Minimum Wage, and with the Annual Wage Review adjustment taking effect concurrently, the rate will shift. Update payroll and HR systems accordingly.
How to embed ongoing compliance changes in your organisation
To achieve compliance when implementing change, payroll teams must ensure that systems, calculation rules, reporting processes, internal controls and supporting procedures are reviewed, tested and updated before the first pay run of the new financial year. This ensures the new requirements are not only understood but embedded into the updated way payroll is processed and managed.
Ongoing compliance also requires more than a system update. Payroll teams need to understand how each change affects the way employees are paid, how superannuation is calculated and reported, how entitlements are administered and how obligations are met across the business.
This is where senior payroll leaders have an important role to play. Legislative change should not sit with one person or be treated as a technical update only understood by a small group. Leaders should take the opportunity to share knowledge, explain the reasons behind the changes and train their teams on the practical impacts. This not only strengthens compliance outcomes, but also builds confidence, capability and professional development across the payroll function.
In a year of significant reform, preparedness is about more than being ready for 1 July. It is about creating a payroll environment where systems, processes and people continue to evolve with the legislation. The most effective payroll teams will be those that keep compliance active, knowledge share with peers and ensure everyone involved in payroll understands not just what is changing, but why and how it matters.
