The ATO is currently data matching STP information to super guarantee information, and requesting clients that have paid super late (after the 28th of the month following quarter end) to lodge SGC Statements.
There are significant penalties for not making Super Guarantee Payments on time to your employees. By law, the contribution due dates cannot be varied, and the super guarantee charge cannot be waived. Despite COVID, you are still responsible for making these payments on time – the ATO has no ability to be lenient or flexible on this.
Super Guarantee Payments
Super Guarantee (SG) payments must be made by an employer for each of their employees by the quarterly due dates, 28 days after the end of each quarter (28 January, 28 April, 28 July & 28 October). SG is calculated as the employee’s ordinary time earnings for the quarter, multiplied by the applicable super guarantee (SG) rate - currently 9.5%.
You claim a tax deduction for super payments you make for employees in the financial year you make them, provided they are paid on time.
What if I miss a payment?
Where SG isn’t paid in full by the quarterly cut-off date, you are liable to pay the super guarantee charge (SGC), and are required by law to lodge the SGC statement.
By lodging a Super Guarantee Charge statement to the ATO within a month of the quarterly due date, you avoid additional penalties.
The SGC charge is made up of:
SG shortfall amounts calculated based on your employee’s salary or wages (ie the late super)
Nominal interest on those amounts (currently 10% per annum)
An administration fee of $20 per employee, per quarter
This payment is not tax-deductible.
What if I make a late payment?
If you make a late payment you can either offset the late payment against the SGC owing or carry the late payment forward as pre-payment of a future contribution for the same employee.
If you make a late payment, you have to lodge a Super Guarantee Charge Statement and pay the super, plus the interest, plus the admin fee.
Once you have elected to claim a late payment offset for any given employee, the late payment:
is no longer tax-deductible
can’t be treated as an early payment or pre-payment for any other quarter
can’t subsequently be reduced or revoked
Super on Overtime if Paid Late - WARNING
There is a further trap with late paid super. Usually when paying employees overtime, this is not treated as Ordinary Times Earnings (OTE) by the ATO, and is hence not subject to super.
However, if super is paid late, the Super Guarantee Charge is based on wages, not on OTE. This means that if you pay your super late, you now have to pay it not only on salary and wages paid, but ALSO on any overtime paid.
And the whole amount paid is NOT tax deductible and the ATO again has no discretion in this area.
This is a very expensive trap for employers paying overtime, and something to be avoided if at all possible.
The message from the ATO is clear, pay your super before the due date, otherwise expect to be contacted by them!
If you have any questions on this at all, please discuss it directly with your personal Client Manager.