The rules around unpaid super have changed, and if you’re a company director, it’s more important than ever to understand what those changes mean.
With the introduction of Payday Super from 1 July 2026, directors can become personally liable for unpaid super much sooner than under the previous system. The good news? There are still opportunities to minimise penalties, but timing is everything.
Here’s what you need to know.
Directors can become personally liable
Many business owners assume they’re only personally liable for unpaid super or tax once the Australian Taxation Office (ATO) issues a Director Penalty Notice (DPN). That is not how it works. If your company doesn’t pay its PAYG withholding, GST or superannuation on time, the law automatically makes directors personally liable for that debt. A Director Penalty Notice simply allows the ATO to begin recovering that debt from you personally after the required notice period.
What’s changed under Payday Super?
Previously, businesses paid super quarterly, giving directors a little more breathing room if payments were delayed. Now, super is linked to every payday. In most cases, contributions must reach an employee’s super fund within seven business days of payday. That means directors need to be far more proactive in monitoring payroll obligations.
Instead of four opportunities each year to get things right, businesses could now face more than 50 compliance deadlines annually.
The 60-day rule matters
One of the biggest changes is how director penalties become “locked down. If unpaid super isn’t reported correctly within the required timeframe, directors lose important protections.
Generally speaking:
- lodge a Voluntary Disclosure Statement (VDS) within 60 days of payday (and before the ATO issues an assessment), and you may still have options available to avoid personal liability if the company enters external administration.
- miss that window, and the penalty can become locked down, meaning directors may need to pay the debt personally if the company cannot.
The ATO can also issue an assessment using real-time payroll data before the 60-day period expires, potentially triggering personal liability even sooner.
What is a Voluntary Disclosure Statement?
A Voluntary Disclosure Statement (VDS) has effectively replaced the old Superannuation Guarantee Charge (SGC) statement under the new regime. Lodging a VDS won’t remove the outstanding super debt, but it can significantly reduce additional penalties. If lodged early enough, it may reduce administrative penalties from up to 60% of the shortfall to as little as 20%, and in some cases even eliminate those additional penalties altogether.
The key is acting before the ATO issues its own assessment.
A payment plan isn’t enough
This catches many directors by surprise. If a Director Penalty Notice has been issued, simply entering into a payment arrangement with the ATO does not remove your personal liability.
Depending on the circumstances, the only ways to remit a non-lockdown director penalty are:
- paying the debt in full;
- appointing a voluntary administrator;
- appointing a Small Business Restructuring Practitioner; or
- placing the company into liquidation,
all within the required timeframe.
Once a penalty has locked down, however, paying the debt is generally the only way to remove the director’s personal liability.
What should directors do?
The move to Payday Super means directors need to monitor payroll obligations much more closely than ever before.
Some practical steps include:
- Ensure super is paid within seven business days of each payday.
- If you can’t pay on time, seek advice immediately.
- Lodge a Voluntary Disclosure Statement before the ATO issues an assessment.
- Never ignore a Director Penalty Notice, there is a limited window to act.
- Remember that payment plans alone won’t remove personal liability.
The bottom line
The new Payday Super regime significantly shortens the timeframe for directors to respond to unpaid super obligations. What was once a quarterly compliance issue is now a payday-by-payday responsibility, increasing both the frequency and the potential personal exposure for company directors.
If your business is experiencing cash flow challenges or you’ve received a Director Penalty Notice, obtaining professional advice early can make a significant difference to the outcome. Acting quickly may preserve options that simply aren’t available once the relevant deadlines have passed.
If you need any help with cash flow and navigating the new Pay Super changes, don’t hesitate to reach out to the MWM team.
