With the roll-out of Single Touch Payroll (STP) now finalised for many employers, it’s never been a more important time to ensure that you’re complying with your employee obligations.
The Australian Taxation Office (ATO) now have more information than ever before including detailed records of payments made to employees in real time. Given we consistently observe that the December quarter is where the most breaches occur in respect of Superannuation Guarantee (SG), it’s important to get processes in place now so you don’t miss the cut for making superannuation contributions coming off the back of the silly season.
Reminder: All SG payments for wages paid in the March quarter are due by 28 April (Note: December quarter SG was due by 28 January).
Made a late superannuation payment?
If you make a late payment (or not at all), you are obligated to let the ATO know by lodging a Superannuation Guarantee Charge (SGC) statement noting the details of each late payment made for each employee. This statement is due one month after the respective quarter SG was due.
Consequences for employers not making their superannuation contributions for employees on time include:
- Paying 9.5% superannuation on all wages, not just ordinary earnings. If payment is late, under the SGC, the shortfall 9.5% superannuation payment reverts to being payable on all wages, not just Ordinarily Times Earnings (OTE). Overtime is an example of wages not ordinarily subject to super but captured if paid late.
- Loss of tax deductions on late contribution payments. To be eligible to claim a deduction the payments must be made on time. If a payment is made after a due date, be it a day late or longer, and an employer intends to use the late payments made to reduce its SGC liability, a tax deduction is generally denied.
- Additional costs also not tax deductible. The subsequent charge will be paid directly to the ATO together with nominal interest and administration fees – none of which are tax deductible in respect of the amount originally due. The administration fee due is $20 per late quarter per employee; and the interest (currently 10% per annum for lost earnings in that employees super fund) will accrue from the start of the relevant quarter until the SGC statement is lodged if the form is lodged later than 28 days after the original due date for the SG.
- Bypassing the SGC may result in having to pay the superannuation again and significant penalties. Employers paying employees superannuation late and directly into the relevant superannuation funds without completing SGC statements and electing to apply the amounts paid against the SGC liability, could result in the business having to pay the superannuation again. In addition, a Part 7 penalty of up to 200% of the SGC liability can be imposed. Importantly, there is no time limit on the period of review for SGC obligations.
Directors of companies can also be personally liable for any unpaid SGC. A Director Penalty Notice (DPN) can be issued to individual directors for unpaid SGC. This can also include unpaid PAYG withholding tax.
If you have any questions regarding the above please contact NCA Books here.