By Emma-Lee Oliver | Senior Payroll Consultant, Australian Payroll Association
One payroll myth just refuses to disappear.
That the maximum contribution base (MCB) can somehow be smoothed out and paid evenly over each pay cycle in the year.
It can’t.
In fact, it never could.
This is one of the more common issues we uncover during our consulting reviews. It is rarely intentional. More often, it is the result of a legacy payroll configuration or a system setup that has simply never been questioned.
With Payday Super and STP2 now shining a much brighter light on the data, this is a good moment to make sure the mechanics are properly understood, because the room for this to go unnoticed is shrinking fast.
The Maximum Contribution Base has one purpose.
It sets the maximum amount of qualifying earnings on which an employer must pay the Superannuation Guarantee (SG).
For 2026-27, that annual cap is $270,830.
Once an employee's qualifying earnings reach that amount, the employer is no longer obliged to pay SG on anything earning above the cap, unless an Award, Enterprise Agreement or employment contract requires additional superannuation contributions.
That is the entire function of the cap. It tells you where the obligation stops, not how to spread the obligation out along the way.
The correct approach is to apply 12 per cent to actual qualifying earnings (previously OTE) as they are paid, period by period, stopping once earnings reach the cap.
From 1 July 2026, Payday Super replaced the quarterly cap with a single annual cap tracked year to date: contributions stop only once cumulative qualifying earnings for the year reach $270,830.
For higher income employees, the cap may be reached earlier in the year, meaning superannuation contributions naturally stop once the annual threshold has been reached.
One of the more common mistakes we see is payroll systems that divide the annual MSCB across each pay period and calculate a fixed maximum superannuation amount each pay run.
This approach is incorrect.
It has never reflected the legislation.
The consequences become obvious when an employee receives:
Instead of paying 12% of the employee's actual qualifying earnings, the payroll system simply pays the pre-set capped amount.
The result is predictable.
Some pay periods are underpaid.
Others are overpaid.
Neither reflects what the legislation requires.
During payroll reviews, we've uncovered this exact scenario on several occasions. It is almost never deliberate. More often, it is hidden inside an old payroll configuration or inherited system setup that nobody has revisited for years.
I will admit I made exactly this mistake early in my own payroll career.
The payroll system had been configured that way long before I arrived, so I simply assumed it was correct.
It wasn't until much later that I stopped to question the logic.
That was when the penny dropped.
The Maximum Contribution Base is a limit, not an amount that should be spread evenly across the year.
Historically, these types of issues could remain hidden for quite some time.
That has changed.
With STP2, employers report far more granular data to the ATO each pay cycle.
Payday Super goes further, requiring superannuation to be paid with salary and wages, reaching the employee's super fund within seven business days of payday.
This means the ATO now sees qualifying earnings and the superannuation paid on them pay cycle by pay cycle, not once a quarter after the fact.
This means the ATO can now compare qualifying earnings and SG contributions every pay run.
If superannuation doesn't align with actual earnings, the pattern becomes much easier to identify.
Where contributions are late or insufficient, employers may also face the Super Guarantee Charge, together with increased compliance activity.
I've worked with several organisations that have had to reconstruct year-to-date earnings, calculate superannuation shortfalls employee by employee and manage the Super Guarantee Charge after issues were identified.
It's a far more expensive exercise than getting the payroll configuration right from the beginning.
With Payday Super now in place, now is the ideal time to review your payroll settings.
Ask yourself these three questions:
1. Is your payroll system calculating SG correctly?
Confirm that superannuation is calculated as 12% of actual qualifying earnings each pay cycle, not by applying a fixed or averaged amount.
2. Are you monitoring year-to-date earnings?
Use payroll reports to identify employees approaching the MSCB so contributions stop only when the cap is genuinely reached.
3. Have you checked your industrial instruments?
Awards, Enterprise Agreements and employment contracts may require additional superannuation contributions above the statutory minimum. These obligations sit outside the MCB and continue even after the annual cap has been reached.
Remember…
The underlying rule has not changed.
Employers must pay 12% of qualifying earnings as those earnings are paid, stopping only when the employee reaches the Maximum Contribution Base, unless additional contractual or industrial obligations apply.
What has changed is visibility.
With STP Phase 2 and Payday Super, payroll data is far more transparent than ever before. Incorrect calculations that may once have gone unnoticed are now much easier to identify.
Now is the perfect time to review your payroll system, challenge long-held assumptions and make sure your superannuation calculations are configured correctly.
Because the Maximum Contribution Base is exactly what its name suggests: a limit, not an average.