The Importance of Getting the Superannuation Guarantee Correct!
The ATO now receives information from the employees’ superfund so they can match this against superannuation that should be paid by the employer. This process, known as data matching, means more than ever employer’s need to be on top of their superannuation obligations to avoid potential penalties like the Superannuation Guarantee Charge (SGC).
Superannuation Guarantee (SG)
Generally, the superannuation guarantee applies to employees who are over 18 years and are paid at least $450 (before tax) per month. This includes full-time, part-time and casual employees.
As part of an employee’s employment conditions the employer must pay the super guarantee into the employee’s chosen super fund. The amount is calculated as a percentage of the employee’s Ordinary Time Earnings (OTE) which includes commissions, allowances and bonuses. The current percentage is 9.5%.
Employers have 28 days from the end of the quarter to make the SG payments to their employee’s superannuation fund(s). See Table 1 for the payment due date.
Minimum Pay Rates: Employers need to ensure they are adequately paying their employees based on the appropriate award, enterprise agreement or if neither apply the national minimum wage rate that is annually reviewed.
What if you fail to pay the Superannuation Guarantee on time?
For employers that fail to pay their SG payments to their employee’s super funds by the due date they will be liable to pay what is called a Superannuation Guarantee Charge (SGC) to the ATO.
What you need to know about the Superannuation Guarantee Charge:
- The charge consists of three amounts
- A SG shortfall – the amount of SG the employee(s) was not paid
- A nominal interest rate of currently 10%
- An administration fee of $20 per employee per quarter
- The SG shortfall amount doesn’t just include Ordinary Time Earnings (OTE). It is calculated using the employee’s entire salary or wages which includes any overtime or annual leave loading.
- The Superannuation Guarantee Charge will not be tax deductible to the employer hence they cannot claim the super contribution or any additional costs or penalties as a tax deduction.
- The Superannuation Guarantee Charge scheme is currently self-assessed by the employer and the onus is on them to report and correct any missed superannuation contributions.
- Employees may contact the ATO if they have reason to believe that they are not receiving the correct SG amount from their employer.
- With the commencement of Single Touch Payroll the ATO will soon be able to track non-compliance via their integration with the Super Funds and SuperStream gateway providers.
- The payment of the Superannuation Guarantee Charge must be accompanied by a Superannuation Guarantee Charge Statement. Failure to lodge the SGC Statement on time may result in an additional levy of up to 200% of the charge amount.
- Once the ATO receives the SGC Statement and payment they will transfer the shortfall amount and interest to the employee’s nominated super fund.
- Employers can contact the ATO to arrange an extension of the cut-off date however interest will continue to accumulate.
- The ATO has a number of actions available to deal with non-payment of SGC debts including SGC audits and issuing Director Penalty Notices
|Quarter||Period||SG payment due date||SGC statement & SGC due date|
|1||1 Jul – 30 Sep||28 October||28 November|
|2||1 Oct – 31 Dec||28 January||28 February|
|3||1 Jan – 31 Mar||28 April||28 May|
|4||1 Apr – 30 Jun||28 July||28 August|
Paying your employee’s superannuation obligations on time is of critical importance as the Superannuation Guarantee Charge and potential ATO audit can quickly cripple a business’ cash flow.
To ensure you are being compliant:
- Know the relevant Awards that apply to your employees
- Ensure all employees are paid the correct amount per the relevant Award or Agreement
- Dedicated bookkeeping or payroll software can assist in this regard
- Ensure the employee superannuation guarantee contributions are paid on time and via a SuperStream compliant gateway
If you have any queries, or need assistance to get your superannuation obligations on track, contact our office:
Watts Price Accountants (Horsham) 03 5382 3001 or email@example.com
Knights Accounting (Rupanyup) 03 5385 5330 or firstname.lastname@example.org