As mentioned in our article of 7 February, the Australian Taxation Office (ATO) has employers who are late in their employee Super Guarantee (SG) contributions firmly in their sights.
Whilst many employers may feel they are on top of their SG obligations, it’s easy to get behind in your payments or make simple payment errors. The ramifications include financial penalties and charges, and can also be damaging to your employee engagement and moral. In addition, company directors may face personal liability issues should your company fail to make employee SG payments on time.
ATO penalties
The ATO imposes a Superannuation Guarantee Charge, which is a non-deductible penalty, imposed on employers who do not pay an employee’s superannuation guarantee by the quarterly due dates.
If the ATO discovers your late superannuation payments in a review of your business, they can apply “Part 7 penalties”. You’re liable for a Part 7 penalty – Superannuation Guarantee (Administration) Act 1992 (SGAA) if you:
- lodge you SGC statement late, or
- fail to provide a statement or information when requested during an audit.
The maximum penalty is 200% of the SGC.
Employers should be aware that the ATO has an unlimited timeframe when dealing with late superannuation payments, so the usual two year / four year review period does not apply to superannuation compliance.
Director liability
SG payments fall under the director penalty regime. This means that if an employer does not meet its SG payments, the ATO can issue a director penalty notice, rendering the director/s personally liable for the debt.
How to avoid late SG payments
Below are tips to help you meet your SG payment obligations and avoid penalties:
- Remember – the date of an SG payment is considered the date when the payment is credited to the employee’s super account, not the date when you, the employer, makes the payment. It may take a few days for the super contribution to be processed through a super clearing house and credited to the employee’s account, so you should make sure to pay their super a few days before the due date.
- Consider paying SG payments more frequently than quarterly. If super is paid weekly, fortnightly or monthly, you can then identify any issues ahead of the due date.
- Note the cut-off dates your clearing house advises for them to submit payments to the appropriate funds.
- If you do miss an SG payment, you need to act swiftly. In the first instance, voluntary disclosure of late SG payments to the ATO is the best course of action.
- If SG payments are made late or received by the clearing house after the due date, you may be able to apply them against future super liabilities for that employee, as mentioned further below.
- If you are late, speak with your accountant asap as voluntary disclosure will minimise interest charges and penalties
Options for late SG payments
If you are late with your SG payments there may be ways to reduce or offset against the Superannuation Guarantee Charge. Information on this is available on the ATO website at the link below.
Reminder of the SG quarterly due dates
Key due dates for SG payments are as follows:
- Quarter 1: 1 July – 30 September (Payment due date: 28 October)
- Quarter 2: 1 October – 31 December (Payment due date: 28 January)
- Quarter 3: 1 January – 31 March (Payment due date: 28 April)
- Quarter 4: 1 April – 30 June (Payment due date: 28 July)
How Falanga & Co can help
If you are unclear about your SG employee obligations, the Falanga & Co team are always here to help and again, if you are late, voluntary disclosure is the best course of action so contacting our team should be the first step. For existing clients please get in touch with your Falanga & Co accountant today.
For those who are not Falanga & Co clients and need assistance, we invite you to click here to schedule a discovery call with a member of our team.
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