If your payroll has been treating commissions or salary-sacrificed super as sitting outside the super guarantee base, Payday Super just converted a quiet quarterly error into 26 visible shortfall events a year. From 1 July 2026, superannuation is calculated on a single earnings base called qualifying earnings, replacing the old two-base system that used ordinary time earnings for one purpose and total salaries and wages for another. For a correctly configured payroll, the dollars barely move. For a misconfigured one, the new base plus per-payday reporting is a spotlight. This guide covers exactly what qualifying earnings includes, what changed against OTE and what only looks like it changed, and the pay-code review every employer should have documented.

Published: July 2026

Why There Were Two Bases, and Why There Is Now One

The old law ran on an awkward split. Employers calculated their SG contributions on ordinary time earnings, but if they fell short, the superannuation guarantee charge was calculated on total salaries and wages, a broader base that included overtime and other amounts super was never owed on. The broader base was a deliberate punishment, and it meant the penalty for a $1,000 miscalculation could be assessed on earnings far larger than the miscalculation touched.

Payday Super collapses the split. Qualifying earnings, defined in a new section 10A of the Superannuation Guarantee (Administration) Act, is now the single base for both the obligation and the shortfall. You pay 12 per cent of QE on time, or your shortfall is measured against the same QE you should have paid on. The punitive salaries-and-wages base is gone, which is one of the few places the new regime is unambiguously softer than the old.

For timing and payment rules around that base, see our Payday Super guide and what the super guarantee costs employers, plus the ATO Payday Super guidance. Configuration work sits inside ordinary finance services and payroll process design.

What Qualifying Earnings Includes

QE gathers four buckets into one definition.

• Ordinary time earnings, unchanged in scope. The core of QE is the OTE concept employers already know: gross earnings for ordinary hours of work, including over-award payments, shift loading, annual leave and most paid leave, annual leave loading, and the allowances and bonuses that were already inside OTE. The reform did not rewrite what counts as ordinary time earnings, and it did not change the scope of the exclusions; genuine overtime, for example, remains outside the base as it always was.
• All commissions. Commissions paid to an employee are QE. Ordinary commissions paid for ordinary hours were already OTE, so for many employers this looks like codification. It is not pure codification: commissions paid solely for work performed entirely outside ordinary hours were previously excluded from OTE and are now inside QE. That expansion matters for sales-heavy payrolls that pay overtime commissions, and it strengthens the case for a full pay-code review rather than assuming “we already paid SG on commissions.”
• Salary sacrificed amounts. Amounts an employee salary sacrifices to superannuation, which would have been QE had they been paid as cash, are counted inside QE. This confirms in the new architecture what has been law since January 2020: an employee’s decision to sacrifice cannot reduce the employer’s SG base. The employer pays 12 per cent on the pre-sacrifice figure, always.
• Payments to expanded-definition workers. Where a contractor is paid under a contract wholly or principally for their labour, they are an employee for SG purposes under the expanded definition in section 12, and those payments are QE. Again, this obligation existed before; QE brings it explicitly inside the single base rather than leaving it in a separate corner of the Act where payrolls forgot to look.

Where a payment falls into more than one bucket, a commission that is also OTE, it counts once. The total QE paid to an employee on a given day is the base, and 12 per cent of it must reach the fund within 7 business days.

What Actually Changed, and What Only Looks Like It Changed

Strip the terminology and the honest summary is this: for an employer whose payroll was already correct, qualifying earnings changes almost nothing in dollars. The amount of super owed on a compliant payroll is substantively the same the day after the transition as the day before. What changed is the environment around errors.

Under quarterly rules, a pay-code mistake washed into a quarterly aggregate that nobody reconciled line by line, surfaced rarely, and was often discovered years later through an employee complaint. Under Payday Super, Single Touch Payroll reports qualifying earnings and the super liability every pay event, funds report what they receive, and the ATO matches the two continuously. A commission miscoded as super-free is no longer a rounding error in a quarterly wash. It is a per-payday shortfall, generating notional earnings from each payday and administrative uplift exposure on every one, visible on a regulator’s dashboard by the second pay run.

That is the real meaning of the base change: not new money owed, but old errors made loud. Reporting detail lives in the Single Touch Payroll complete guide.

The Two Classic Misconfigurations

Two settings account for the overwhelming majority of base errors, and both are worth checking this month even if you are certain.

• Commissions and bonuses coded outside the super base. Take a sales representative on a $70,000 base with $60,000 of commissions. Correct configuration: SG on $130,000 of QE, which is $15,600 a year. Misconfigured payroll paying super on base only: $8,400. The gap is a $7,200 annual shortfall for one employee, and under the new regime it does not accrue as one invisible annual sum. On a fortnightly payroll it materialises as 26 separate shortfall events, each starting its own daily interest clock, each carrying uplift exposure of up to 60 per cent if never disclosed, each reported to the ATO through STP in the same week it occurs. Multiply by a sales team and the exposure compounds into the kind of number that used to appear only in remediation headlines.
• Salary sacrifice reducing the base. An employee on $120,000 sacrifices $15,000 to super. The employer’s SG obligation is 12 per cent of $120,000, which is $14,400, on top of the $15,000 sacrificed. A payroll configured to pay 12 per cent of the post-sacrifice $105,000 is short $1,800 per employee per year, and has been non-compliant since 2020. QE’s explicit treatment of sacrificed amounts removes the last shred of ambiguity, and the per-payday regime removes the hiding place.

A third pattern deserves a mention for labour-heavy businesses: contractors paid mainly for their labour who have never received super. The expanded definition catches them, their payments are QE, and every invoice cycle is now a potential QE day. If your contractor book has never been tested against the mainly-labour principle, test it before the data does. Use the contractor vs employee cost calculator for commercial comparison, and treat SG testing as a separate legal question.

Sales team worked scale

A five-person sales team each on $65,000 base plus $45,000 commission: correct QE $550,000, super $66,000. Base-only configuration pays super on $325,000, super $39,000. Annual shortfall $27,000, or about $1,040 per fortnight. Left undisclosed for a year, notional earnings and a full uplift can push the economic damage past $45,000. That is one mis-set pay code family.

The Maximum Contribution Base Goes Annual

One structural change lands squarely on higher earners and the businesses that pay them. The maximum super contribution base, the earnings ceiling above which an employer is not obliged to pay SG, was previously applied per quarter. A one-off bonus could blow through a single quarter’s ceiling, capping the super on it, while the other three quarters ran normally.

Under Payday Super the ceiling becomes a single indexed annual threshold, applied across the year rather than quarter by quarter. The effects run both ways. An employee whose earnings only breached the old ceiling because a bonus landed in one quarter will now generally accrue SG on more of their income, because the annual test smooths the spike. And employers who built payroll logic around quarterly capping need that logic rebuilt, because the quarterly ceiling no longer exists. Higher earners should also watch the interaction with their concessional contributions cap, particularly in the transition year, where deferred June 2026 quarter contributions can stack with a full year of payday super.

The Pay-Code Review: Do It Once, Document It, Diarise It

The whole subject reduces to one deliverable: a documented pay-code review. The method is not complicated.

List every pay item in the payroll system: earnings types, allowances, loadings, bonus and commission codes, leave types, sacrifice arrangements, and any contractor payment categories. Test each against the QE buckets: is it OTE, a commission, a sacrificed amount, or an expanded-definition labour payment? Mark each item in or out of the base, correct the settings that fail, and record the review with a date, the reviewer, and the reasoning for anything borderline. Then diarise the review to repeat whenever pay structures change and at least every few years, because pay codes drift as businesses add allowances, restructure incentives and inherit settings from old software migrations.

That single document does three jobs at once. It prevents the misconfigurations above, it stands as evidence of the genuine attempt that the ATO’s first-year compliance approach rewards, and it converts a payroll from something configured once by whoever set it up into something an owner can actually vouch for. It is also, precisely, the kind of quiet structural work an embedded finance team does in week one of an engagement, because everything else in payroll compliance is built on the base being right. Size expected contributions with the superannuation contribution estimator after the review, and load full employment cost with the employee cost calculator.

Decision framework: reconfigure, remediate, or both

If go-forward codes are wrong, fix them before the next pay run. Stopping the bleeding is always first.

If history is wrong, quantify the shortfall, take advice, and use voluntary disclosure where appropriate. Silence is the expensive path.

If both are wrong, fix go-forward in the same week you start the historical file. Parallel tracks beat sequential delay.

For award classification issues that feed base errors, people and HR support and award process design matter as much as the ledger.

Related resources and next reading

• Single Touch Payroll complete guide
• Contractor vs employee classification checklist
• Contractor vs employee cost calculator
• Employee cost calculator

FAQ

What are qualifying earnings under Payday Super?
Qualifying earnings is the single earnings base for superannuation from 1 July 2026. It comprises ordinary time earnings, all commissions, amounts salary sacrificed to super that would otherwise have been QE, and payments to workers caught by the expanded employee definition, including contractors paid mainly for their labour. Twelve per cent of QE must be received by the employee’s fund within 7 business days of each payday.

Is qualifying earnings bigger than OTE?
Often only slightly for a correctly configured payroll, but not always identical. Salary sacrifice amounts and ordinary commissions were already inside the SG base, and most OTE exclusions are unchanged. One real expansion is commissions paid solely for work entirely outside ordinary hours, previously outside OTE and now inside QE. Employers who pay more under QE are still overwhelmingly those whose payrolls were misapplying OTE, plus sales teams with overtime commissions.

Does overtime attract super under qualifying earnings?
The scope of the exclusions did not change with the reform, so payments for genuine overtime hours remain outside the base as they were under OTE. The classification still needs care where loadings and annualised arrangements blur the line between ordinary and overtime hours.

Does salary sacrifice reduce the super my employer pays?
No, and it has not since January 2020. QE explicitly includes sacrificed amounts, so the employer’s 12 per cent is calculated on the pre-sacrifice earnings. A payroll calculating SG on post-sacrifice pay is producing a shortfall every single payday.

Are commissions and bonuses included in the super base?
All commissions are expressly qualifying earnings, and bonuses follow the same treatment they had inside OTE, where most bonuses relating to ordinary hours are included. Commission and bonus codes set as super-free are the single most common configuration error the new regime exposes.

Do contractors get super under Payday Super?
The reform did not change who is covered, but it restates the existing rule inside QE: a contractor paid under a contract wholly or principally for their labour is an employee for SG purposes, and those payments are qualifying earnings. Contractor arrangements that have never been tested against that principle should be reviewed now.

What happened to the maximum super contribution base?
It moved from a per-quarter ceiling to a single indexed annual threshold. Bonuses that once breached a quarterly cap are now smoothed across the annual test, generally increasing the super accrued by affected higher earners, and payroll logic built on quarterly capping needs to be rebuilt.

What is the fastest way to check my payroll is compliant with QE?
Run a documented pay-code review: list every pay item, test each against the QE buckets, fix what fails, record the reasoning and date it. It is a few hours of work that prevents per-payday shortfalls, and it doubles as evidence of a genuine transition under the ATO’s first-year compliance approach.

Will fixing STP codes alone fix super payments?
No. Correct reporting and correct remittance are separate obligations. A code fix stops future understatement; historical shortfalls still need payment and, where required, disclosure.

How often should the pay-code review be repeated?
Whenever pay structures change, after software migrations, and at least every few years as a standing control. Codes drift quietly.

About Scale Suite

Scale Suite is a Sydney-based provider of outsourced finance teams and fractional CFO services for Australian SMEs. We deliver weekly bookkeeping, payroll, BAS/IAS lodgement, cashflow reporting, management accounts, and strategic fractional CFO oversight, all as a fully embedded team that works inside your business.

CA-qualified, Xero Certified, and registered BAS Agents, we replace fragmented bookkeepers and once-a-year accountants with one responsive finance function at a fraction of the cost of full-time hires. We serve growing businesses across Sydney, Melbourne, Brisbane, and Perth, with packages starting from $1,500 per month and no lock-in contracts.

Visit Scale Suite | View Our Finance Services | View Our HR Services | Get Your Free Proposal

Disclaimer

We review and check this guide periodically. At the time of writing (July 2026), all information was current. Scale Suite is a registered BAS Agent, not a licensed tax advisor or financial advisor. This content is general information only and does not constitute professional tax, financial, or legal advice. Some details may change over time.

Sources

• Superannuation Guarantee (Administration) Act 1992, section 10A (qualifying earnings) and section 12 (expanded employee definition) (https://www.legislation.gov.au)
• Treasury Laws Amendment (Payday Superannuation) Act 2025 (https://www.ato.gov.au/tax-and-super-professionals/for-superannuation-professionals/superannuation-topics/payday-super)
• Australian Taxation Office, Payday Super guidance and draft Law Companion Ruling on qualifying earnings (March 2026) (https://www.ato.gov.au/tax-and-super-professionals/for-superannuation-professionals/superannuation-topics/payday-super)
• Australian Taxation Office, ordinary time earnings guidance (https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/super-for-employers/how-much-super-to-pay)