Have you paid your employees late in any quarter (even by one or several days)?
Are you unsure of your superannuation obligations for contractors you engage in your business?
Are you looking to sell your business, and perform your own due diligence to ensure you have met your historical obligations?
If you answered yes to any of the above questions, then now is the time to reconcile your historical superannuation obligations and submit a disclosure to the ATO to avoid unnecessary penalties.
If you have missed a payment, don’t worry, we understand the complexities of running a business, and are here to help you get back on track.
The fine, or penalty, for late super is called the Superannuation Guarantee Charge (SGC) and is calculated based on how much you owe.
Why is it important to pay super on time?
The ATO has recently released Practice Statement Law Administration PSLA 2021/3 that outlines the principles for the remission of the additional Superannuation Guarantee Charge (SGC) imposed under Part 7 of the Superannuation Guarantee Administration Act (‘SGAA’) 1992.
Simply speaking, where an employer fails to lodge a Superannuation Guarantee (SG) statement by the lodgement, or extended lodgement date, additional penalties will apply. The penalty applies for both employees and contractors and may be equal to double the SGC payable to the employer (i.e. 200% of the SGC).
What are the penalties for not paying super or being late?
- the shortfall amount (the contributions not paid or paid late),
- interest of 10% per annum, and
- an administration fee of $20 per employee per quarter.
The SG Charge is based on the employee’s salary and wages, which may be greater than their OTE (as it will include overtime).
How do I know whether any part of the 200% penalty will be remitted?
There are four steps to assess whether the penalty of 200% can be remitted partially:
1. Employer’s attempt to comply with their obligations through late payment;
2. Employers attempt to comply with their obligations by lodging an SG statement;
3. Consider an increase of reduction based on the employer’s compliance history for both SG obligations and other taxation laws over a 3 year period; and
4. Any other mitigating factors that may be relevant.
What should I do if I’m late with a super payment?
First, and importantly, pay what is due as soon as possible by completing and lodging a SGC Statement with the ATO. If you’re not sure how much you owe, your Nexia Advisor can help you work this out.
How can I prevent late payments in future?
The best way to avoid late super payments is to have a regular payment system in place using a Single Touch Payroll-compliant platform.
Can I write the fines off as a business expense?
No. The Super Guarantee Charge is not tax deductible. What’s more, directors of companies can be held personally liable for the penalties.
It is critical that as an employer you consider your SG position and to take action to address any possible non-compliance to avoid heavy penalties and creating a pattern of behaviour that would heighten the organisation’s risk profile with the ATO.
A recent client example arising out of an ATO review, was that our client had paid a couple of their SG quarters late by 2 to 3 days each time, and the interest that accrued as a result of the SG disclosure was significant despite the fact that the SG was in their employee’s superannuation funds a couple of days after the end of the quarter. This is because the interest will continue to accrue until a SGC statement is lodged with the ATO.
We can help
Nexia Sydney can help you comply with all of your SG compliance obligations. To better understand how the PSLA could impact you, or if you would like to undertake a SG compliance health check, please contact Nexia Sydney Business Advisory Partner Katie Lin on KLin@nexiasydney.com.au.