Meet your super guarantee (SG) obligations
You have a lot of duties as a business owner. You must not only be reassured about your tax responsibilities and salary payments to your employees, but you must also keep track of your financial reporting. Although it can be difficult to keep track of everything, it is critical to ensure that your business complies with all applicable rules and regulations.
Staying on top of your employee’s minimum superannuation guarantee contributions is a crucial part of your legal duties. If you don’t comply, you could face a super guarantee charge (SGC), which is a penalty for failing to pay an employee’s super guarantee on time.
If you find yourself in this situation, there are a few things you should be aware of regarding the super guarantee charge.
Paying your SG on time
Paying your employee’s super guarantee on time is the best approach to avoid paying the SGC. You must keep track of your payment due dates in order to fulfill this purpose.
There are some key dates which you should be aware of each quarter:
|Quarter||Period||Super guarantee 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||28 July|
Missed and late super guarantee payments
If you do not pay an employee’s super guarantee on time and to the right fund, you must lodge the superannuation guarantee charge (SGC) statement and pay the SGC to the ATO.
By the following due dates, the statement must be lodged and the fee must be paid:
|Quarter||Period||Super guarantee charge and statement due date|
|1||1 July – 30 September||28 November|
|2||1 October – 31 December||28 February|
|3||1 January – 31 March||28 May|
|4||1 April – 30 June||28 August|
You can request the ATO for a lodgement extension if you believe you may miss the above due dates.
Offset the SGC with late super payments
You also have the option of offsetting the late payments against the SGC if you:
- made the payment to your employee’s super fund
- made the payment before the date your original SGC assessment was made
- lodge your late payment offset election in the SGC statement through Online services for business within 4 years of your original SGC assessment date.
- advise the ATO of the date of late payment to your employee’s super fund.
If you make a late payment to an employee’s fund before the SCG assessment is raised, the ATO may allow you to offset a late payment amount for one of your employees against your SGC liability.
You must, however, apply and get the ATO’s approval for an offset election within 4 years of the date of your original SGC assessment.
Carry forward late super payments
You may also be able to carry forward a late super payment if:
- it’s for the same employee
- the start of the carried forward quarter is within 12 months after the payment date.
You need to calculate the superannuation guarantee charge
The following items are included in the penalty for late super guarantee payments:
- The super guarantee shortfall (i.e. the amount you haven’t contributed or haven’t contributed by the due date);
- nominal interest on the super guarantee shortfall (currently 10%); and
- an administration charge ($20 per employee, per quarter).
To make things easier, the ATO offers businesses with a super guarantee charge statement and calculator tool that allows you to establish if you must pay the SGC for your employees and, if so, how much. The SGC is not tax-deductible.
Avoid additional penalties by lodging SGC statement by the due date
According to the ATO, failure to lodge the SGC statement and pay the charge on time, might result in a penalty of up to 200 percent of the first charge. You may also face an administrative penalty if you pay less than the statutory SGC amount, which may be up to 75 percent of the shortfall.
Also, the ATO may issue a “director penalty notice” that would make the director of the company personally liable for the super guarantee charge amount. From there, the ATO may also pursue legal action in response to the notice.
Please note that every effort has been made to ensure that the information provided in this guide is accurate. You should note, however, that the information is intended as a guide only, providing an overview of general information available to contractors and small businesses. This guide is not intended to be an exhaustive source of information and should not be seen to constitute legal or tax advice. You should, where necessary, seek a second professional opinion for any legal or tax issues raised in your business affairs.