How careful are you to ensure that you pay your employee’s compulsory 9.5% superannuation by the due date? Fairly careful? Mostly careful? Unfortunately neither of these will keep you out of trouble. The ATO and superannuation funds are becoming clever at detecting such late payments.
Compulsory superannuation payments are due quarterly, within 28 days after the end of the relevant quarter. So for the quarter ended 30th September, payments need to be with the super fund by the 28th of October.
If you fail to pay the entire quarterly accrual or simply pay late (even by one day) a shortfall arises. By the time you realise a shortfall, you enter the realm of the Superannuation Guarantee Charge (SGC), the consequences of which can be summarised as follows:
To understand the seriousness of this law, imagine that you have 10 employees and you owe them $10,000 in compulsory superannuation for the quarter ended 30 September 2015. You pay in full on the 29th of October 2015 (1 day late). Assume that you are then subjected to an audit in 2017 and eventually complete the required form on 30 June 2017. The first component of the charge will be the shortfall (the amount unpaid by the due date) of $10,000. Then, interest will be calculated from the start of the relevant quarter (1 July 2015) until the date the form is completed (30 June 2017), being a total of two years. Interest is therefore 10% x $10,000 x 2 = $2,000. Lastly, an administration fee of $20 x 10 employees is payable i.e. $200. A total charge of $12,200 will arise.
What about the $10,000 paid on the 29th October? The amount can either be offset against this charge (although doing so renders the $10,000 paid as non-deductible) or carried forward as an advance payment to a subsequent quarter.
What can employers do to avoid this problem?
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