As an employer, you are required to pay super guarantee (SG) for eligible employees calculated from the day they start with you. You must make the payments at least four times a year, so they are received by your employee’s super fund by the quarterly due dates. The due dates for each quarter are:
Q1: July to September – 28th October
Q2: October to December – 29th January
Q3: January to March – 28th April
Q4: April to June – 28th July
When a due date falls on a weekend or public holiday, it automatically changes to the the next business day. You can make payments more regularly than quarterly if you want to (for example, fortnightly or monthly) as long as your total SG obligation for the quarter is received into your employee’s super fund by the due date.
So, what happens if you miss the deadline, and you haven’t paid the minimum amount on time and to the correct fund?
Missed and Late Payments
If you don’t pay an employee’s super on time and to the right fund, you must pay the superannuation guarantee charge (SGC) to the ATO (not directly to the superfund) and lodge an SGC statement to the ATO. The SGC is not tax-deductible.
The charge is made up of:
- SG shortfall amounts (the value of super you didn’t pay – including any choice liability calculated on your employee’s salary or wages)
- interest on those amounts (currently 10%)
- An administration fee of $20 per employee, per quarter.
You report and rectify the missed payment by lodging an SGC statement by the due date and paying the SGC to the ATO (not the super fund). If you pay SG late to your employee’s super fund, you may be able to use the late payment either to offset the SGC or to carry forward as pre-payment of a future contribution for the same employee. You must still lodge an SGC statement and pay the balance of the SGC to the ATO.
Director Penalties
The director of a company that fails to meet an SGC liability in full by the due date automatically becomes personally liable for a penalty equal to the unpaid amount.
When an SGC liability remains outstanding, the ATO may issue a director penalty notice (DPN), though this is necessary only to enable us to start legal proceedings to recover the penalty. Even without issuing a notice, the ATO can collect the penalty by other means, for example, by withholding a tax refund.
The penalty will be remitted if your company pays the outstanding amount at any time. It may be remitted if your company goes into voluntary administration or liquidation (conditions apply).
Tax Deductions
When paid on time, you can claim a tax deduction for super payments you make for employees in the financial year you make them. Regardless of whether your accounts are reported on a cash or an accrual basis, contributions are considered paid when the super fund receives them. Missed payments may attract the super guarantee charge (SGC), which is not tax-deductible. Contributions for employees aged 75 and over must be paid by the quarterly due date to be deductible.
You can use a late payment to reduce the charge or as pre-payment of a future super contribution (for the same employee). This pre-payment is tax-deductible in the normal way.
Clearing Houses
A clearing house distributes super contributions to your employees’ funds on your behalf. It saves a significant amount of time when making payment when your employees all have different superfunds. If you use a clearing house, the employee’s super contribution is counted as being paid on the date the super fund receives it, not the date the clearing house receives it from you.
If you would like some more information, please don’t be embarrassed. It’s best to speak up. Give us a call.
Alternatively, you can find more on this topic on the ATO website:
https://www.ato.gov.au/Business/Super-for-employers/Paying-super-contributions/
