401(k) vs Payday Super for US-owned Australian company hiring in Australia

If you operate a US-owned Australian company hiring your first Australian employee, you as a foreign shareholder may be familiar with 401(k) contributions but may not be familiar with how Australian superannuation works. While both involve retirement savings, Payday Super operates under Australian rules that are different from the US 401(k) system. 

As the Australian employer, you need to understand and meet your foreign-owned business’s Australian superannuation, payroll, tax and reporting obligations when employing staff in Australia. 

Is Australian Payday Super the same as a US 401(k)?

The Australian superannuation, commonly known as Payday Super, is not the same as the US 401(k). Australian superannuation is a compulsory employer contribution, while a 401(k) is a US employer-sponsored retirement plan that generally involves employee contributions and may include employer contributions. 

A 401(k) can allow a US employee to elect to have part of their wages contributed to an individual retirement account. Depending on the plan, the employer may also make matching or other contributions. The Internal Revenue Service (IRS), the US federal government agency responsible for administering and enforcing the country’s federal tax laws, explains how 401(k) employee and employer contributions work. 

Australian superannuation works differently. For eligible employees, your foreign-owned Australian company is required to make compulsory superannuation contributions. Employees do not opt into these employer contributions. The obligation covers employees aged 18 and over, as well as employees under 18 who work more than 30 hours a week. Certain contractors can also be entitled to superannuation depending on the nature of the arrangement. The ATO provides guidance on which workers are covered and when employers need to pay superannuation. 

For a US-owned Australian company, the important distinction is that the Australian company is the employer. Its US parent does not apply its US 401(k) rules to the Australian employee. 

To summarise, the key differences between 401(k) and Payday Super are: 

When does a US-owned Australian company have to pay super?

From 1 July 2026, employers need to pay superannuation on payday, with the contribution required to reach the employee's super fund within seven business days of payday. The super guarantee rate is 12% of qualifying earnings. 

The ATO explains how employers calculate and pay super. Employers calculate super using qualifying earnings, which replaced ordinary time earnings as the calculation base and includes ordinary time earnings, commissions and salary-sacrifice amounts. The contribution must reach the employee's super fund, together with the information needed to allocate it to the employee's account, within the applicable timeframe. 

Specific exceptions can apply to the standard payment timeframe, including circumstances involving a new employee's first contribution. If you are unsure how Payday Super works, seek advice from ABN Australia’s tax and accounting team. 

What happens if a US-owned Australian company pays super late?

If you do not meet your superannuation obligations, the Superannuation Guarantee Charge (SGC) can apply. The SGC can include the individual super guarantee shortfall, notional earnings calculated at the general interest charge rate, an administrative uplift and, where applicable, choice loading. 

The administrative uplift starts at 60% of the shortfall plus notional earnings. It can fall to nil in certain circumstances where an employer voluntarily discloses the error within 30 days and has not had an ATO-initiated assessment in the previous 24 months. 

Further penalties can apply if an assessment remains unpaid after the relevant Notice to Pay period. Late super can also breach the Fair Work Act, an award or an enterprise agreement. Directors can also have personal exposure for unpaid SGC through the director penalty regime. 

The ATO's PCG 2026/1 sets out its compliance approach for Payday Super for the period to 30 June 2027. For a newly established Australian company, may it be foreign owned, having the correct payroll process in place before the first employee is paid is therefore important. 

How can a US-owned Australian company make sure its payroll is compliant?

A US-owned Australian company stays payroll compliant by meeting six obligations locally, because the Australian subsidiary is the employer, not the US parent: 

• Withhold and remit PAYG tax

• Pay super at 12% of qualifying earnings, received by the employee's fund within 7 business days of payday

• Lodge Single Touch Payroll on or before each payday

• Register for state payroll tax and hold state workers compensation insurance

• Keep records 7 years and issue pay slips within 1 working day

• Correct rejected contributions and reporting errors immediately 

How can ABN Australia help US-owned businesses with Australian payroll?

ABN Australia helps foreign-owned businesses manage payroll, including superannuation obligations and local compliance requirements. We have assisted a considerable number of foreign-owned businesses with outsourced payroll and can also support related requirements, including company establishment, corporate compliance, tax and accounting. Get local support for your payroll and ongoing business requirements with ABN Australia.

Last updated: 24th Sept 2026

About the Author

Ro Elvinia is ABN Australia's Customer Success and Marketing Manager. She holds a bachelor’s degree in mass communication, majoring in journalism, and also has an academic background in civil engineering. With over a decade of experience in professional writing and a background spanning journalism, Australian immigration, and business services, Ro brings a unique mix of communication and analytical expertise. She works closely with international clients and contributes to ABN Australia's content strategy, helping global businesses stay informed and confident as they navigate the Australian market.