Superannuation guarantee (SG) is the minimum amount you must pay to avoid the superannuation guarantee charge (SGC). Super guarantee is 10.5% of an employee’s ordinary time earnings.
If an audit is requested by the ATO for late payment, superannuation will also be payable on earnings usually excluded from the initial super guarantee calculation, such as overtime. This can result in substantially high amounts being payable, which can cause hardship to your business.
Any late payment of superannuation will mean the expense, together with the interest and administration fees will be non-deductible, meaning there will be no tax deduction for these amounts.
Your employee’s super contribution is only considered ‘paid’ on the date it’s received by their superannuation fund.
If you are using a clearing house, payments made to the clearing house that are not processed, or do not reach the superannuation fund until after the payment due date, are considered late payments.
Processing times vary between clearing houses therefore we recommend paying your superannuation obligations within the first week, after the quarter ends.
Please refer to the below example where superannuation is considered to be paid late by the ATO for superannuation payment, due date being by 28 October.
A client has approved their superannuation payment in their complying software on 23 October, the money has physically left the client’s bank account on 24 October, the superannuation payment was not received in the employee’s superannuation fund until 30 October. This payment is considered late and an SG statement would need to be lodged, including any earnings that would usually be excluded from superannuation calculations, i.e. overtime and allowances.
Please refer to the superannuation due dates below, for your reference
Quarterly super payment due dates
| Quarter | Period | Payment due date |
|---|---|---|
| 1 | 1 July – 30 September | 28 October |
| 2 | 1 October — 31 December | 28 January |
| 3 | 1 January — 31 March | 28 April |
| 4 | 1 April — 30 June | 29 July |
When a super due date falls on a weekend or public holiday, your contribution must be received by the fund on or before the next business day.
You can also make payments more frequently than quarterly, for example fortnightly or monthly. If you do, ensure you pay your total superannuation guarantee (SG) contribution for the quarter by the due date.
Issues meeting obligations
If you are having trouble meeting your SG obligations, you should make a voluntary disclosure by completing and lodging an SGC statement by its due date, even if you cannot pay it in full.
The ATO are unable to provide extensions to lodge SGC statements past the due date. Nominal interest will be calculated until the lodgement date of the SGC statement. We encourage you to lodge as soon as possible, to minimise nominal interest.
The ATO are more likely to reduce or waive the penalty if:
- you make a genuine attempt to meet SG obligations;
- you have a good compliance history.
For example, the ATO may reduce a penalty for an employer who lodged an SGC statement after the relevant due date, but before being notified of ATO compliance action.
If you do not lodge an SGC statement before audit action has started, a greater Part 7 penalty could apply. This could be up to 200% of the SGC.
Unwilling to meet obligations
The ATO will take stronger compliance action, including imposing additional penalties, if you do not:
- engage with them promptly by replying to their correspondence;
- take steps to resolve your outstanding superannuation guarantee obligations.
The ATO may also issue:
- an SGC liability estimate;
- a garnishee notice;
- a director penalty notice;
- a direction to pay SGC;
- an education direction to complete the Super guarantee employer obligations course.
The ATO take this approach with employers who:
- repeatedly do not pay the correct amount of superannuation guarantee;
- make it difficult for us to determine an SGC liability;
- repeatedly fail to keep appointments;
- repeatedly fail to supply information without an acceptable reason;
- deliberately supply information that is irrelevant, inadequate or misleading;
- engage in any behaviour to delay the supply of information.
Example: missed super guarantee payments
Teddy owns and runs a novelty store and usually pays super for eligible employees on time. Due to unforeseen circumstances, Teddy misses paying super to his employees’ funds for the SG quarterly due date of 28 April (for the quarter ending 31 March).
Teddy knows that the SG quarterly due date cannot be extended by law. To avoid penalties, Teddy must lodge an SGC statement within a month of the quarterly due date (in this example: by 28 May) and pay the SGC to the ATO for the outstanding super he owes.
Teddy cannot pay the SGC in full but lodges his SGC statement through Online services for business by the due date to avoid additional penalties. He also sets up a flexible payment plan.
How can we help?
Our bookkeepers are emailing client’s regularly requesting superannuation payments are approved through your software, we encourage you to approve those payments immediately.
Our practice is here to provide assistance with completing any SGC statements required to be lodged with the ATO and also to help assist you in ensuring you remain compliant.
Please refer to the ATO links below for additional information