ATO targeting businesses who make late superannuation payments
With the introduction of SuperStream the ATO have increased their audit activity in relation to late and non-payment of employee superannuation. As most business owners know, employers must pay superannuation at a rate of 9.5% of ordinary times earnings for most employees and some contractors over 18 years of age who earn more than $450 per calendar month. These payments must comply with SuperStream requirements and must be made electronically to complying funds no later than 28 days after the end of the relevant quarter.
What employers may not realise is that the consequences for missing superannuation payments are far-ranging and extremely costly. They can include:
• Paying 9.5% superannuation on all wages, not just ordinary earnings. If payment is late, there is a 9.5% superannuation payment payable on all wages, not just those governed by the super guarantee rules.
• Loss of tax deductions on late contribution payments. Tax deductions for superannuation contributions are available only for actual payments made and not for amounts due. To be eligible to claim a deduction the payments must be made on time. If a payment is made after a due date, even by one day, a tax deduction is denied.
• Additional costs to pay. A Superannuation Guarantee Charge (“SGC”) statement is required to be lodged for missed payments. Interest and administration charges will apply. Missing a superannuation payment will also cost you time as completing the SGC statement can be very time consuming.
• Bypassing the SGC may result in having to pay the superannuation again. If employers pay employee superannuation late and directly into the relevant superannuation funds without completing SGC statements and electing to apply these amounts paid against the SGC, it could result in the business having to pay the superannuation again.
• Directors of companies can also be personally liable for any unpaid SGC.
What to do if I’ve paid superannuation late?
If you haven’t met your superannuation obligations as an employer, you must lodge an SGC statement and pay any amount due directly to the ATO. You can do this by:
– Completing the form online and electronically submitting it via the Business Portal (available if you have an Auskey)
– Completing the Superannuation guarantee charge statement and calculator tool and posting the generated paper form to the ATO
– Completing a paper version of the form
If you do have to pay the SGC, there may be some relief depending on your situation. These can include using the late payment offset to reduce the amount of SGC payable or carrying the late payment forward as a prepayment of future superannuation contributions. In the long run though, it is just not worth losing a tax deduction, spending extra effort on administration or running the risk of having to pay the contributions twice by not paying employee superannuation amounts on time.
If you have any queries or would like more information on this or any other superannuation topics, please contact us on (02) 6621 2257.
This information and the links provided are for general advice only and do not take into account your specific situation and, accordingly, should not be taken as constituting professional advice.