From the first full pay period on or after 1 July 2026, two payroll cost changes land in the same pay run. Award wages rise 4.75%, the National Minimum Wage rises 6% to $1,004.90 a week, and payday super begins, requiring super to be paid at the same time as wages instead of quarterly. For clients already trading on a thin buffer, this is not a routine adjustment. It changes when cash leaves the business, and it shortens the time a director has before a cash problem becomes a personal one.
What actually changes on 1 July
Two things move at once. The wage increase lifts the base payroll cost for around one in five workers, concentrated in the award-reliant sectors. At the same time, payday super removes the quarterly timing gap that many small businesses have quietly relied on to manage cash. Super contributions must reach the employee’s fund within seven business days of payday, and the Superannuation Guarantee is already at 12% after last July’s step up. The ATO’s Small Business Superannuation Clearing House is also closing, so any client using it needs a compliant alternative in place before the changeover.
Put a number on it
The shift is easier to see in dollars. Take a business with $40,000 in monthly payroll. At 12%, that is around $4,800 of super a month. Today, that money can sit in the business for up to a quarter before it has to be remitted. From 1 July, it leaves with every pay run. For a client invoicing on 30 or 60 day terms, that timing gap was working capital they were quietly relying on, and it disappears overnight.
The risk most people are missing
The cash flow story is only half of it. Under the quarterly system, a super shortfall could sit unnoticed for months. Under payday super, the obligation attaches to every pay cycle, so a shortfall surfaces almost immediately and converts into a Superannuation Guarantee Charge (SGC) far sooner than it used to. That matters because unpaid SGC is one of the liabilities a director can become personally responsible for under a Director Penalty Notice (DPN). In practice, payday super shortens the runway between a client falling behind on super and that shortfall becoming the director’s personal debt. The change does not just squeeze cash, it compresses time.
Why the timing makes this worse
This lands into an environment that is already stretched. ATO collectable debt has reached a record $105 billion. DPN activity surged 136% to around 85,000 notices in 2024 to 2025, covering $5.5 billion in liabilities. Since 1 July 2025, ATO interest on tax debt is no longer tax-deductible, which makes carrying old debt more expensive. Insolvency appointments are at their highest in over a decade and have not yet peaked. No single one of these is fatal. The stack is the problem.
The sectors carrying the most risk
Hospitality is the clearest example. Cafes and restaurants were already under pressure before any of this, on thin margins and high wage ratios. The same is true of construction, labour hire and healthcare. The numbers tell the story: 79% of small and medium businesses already hold less than three months of cash, one in three owners say they may need to use personal savings to meet payday super, and 82% expect to delay or cut growth plans this year.
A simple way to triage your client base
Not every client needs a call. The ones who do tend to fall into three groups:
- Act now: an ATO payment arrangement that only works on quarterly super timing, unpaid or late super, or director loan accounts that could convert into personal liability under a DPN.
- Watch closely: less than three months of cash, a high wage-to-revenue ratio in hospitality, construction, labour hire or healthcare, or regular reliance on the next debtor payment to make payroll.
- Prepare: otherwise healthy, but still need the closing Small Business Superannuation Clearing House replaced and payroll cash flow stress-tested before 1 July.
What this looks like for a client
Consider a hospitality business carrying around $180,000 in ATO debt, on a payment arrangement that was already stretching them. On a quarterly super cycle they were just holding the line. Once we modelled payday super against their weekly payroll, the arrangement no longer worked on paper, and a single slow month would have tipped them into default. Working alongside their accountant, we restructured the position before the ATO escalated, which kept the business trading and the directors out of personal exposure.
Where de Jonge Read® fits
If a client sits in the act now or watch group, the months before and after 1 July are the time to move, not after a notice arrives. de Jonge Read® works alongside advisers to assess the position and find the best possible outcome while options are still open, including restructuring paths that keep a viable business trading. The assessment is confidential and obligation-free, and we work alongside you, not around you. If you have a client you are watching, talk to us early on 1300 765 080.
Should you have clients or associates that you know are struggling with financial issues or need assistance in reviewing their business affairs in preparation for what’s around the corner, our team of Strategists would be pleased to discuss options that are available on how to best design and implement insolvency strategies. Contact us now on p. 1300 765 080 | ua.moc.arjd@ofni
Did you know?
Phoenixing is another name of business restructure. Read more about business restructures and when this can be an option for you.
