Employee Super Payments

As an employer, you are required to make ongoing superannuation guarantee (SG) contributions on behalf of your employees.

These SG contributions are calculated at 9.5% of the employee’s real time earnings and must be paid quarterly into that employee’s nominated super fund. There are several ways in which employers can become non-compliant in their superannuation obligations. If SG contributions are insufficient, not paid at all, paid late or paid into the wrong fund an employer may face penalties.

Some employers also avoid their superannuation responsibilities by paying employees in cash or incorrectly treating them as contractors.Not meeting your superannuation responsibilities can be a costly mistake for employers. Ordinarily, SG contributions can be deducted from the business’s taxable income.

However, if you pay your SG contributions late you will most likely lose this opportunity. Instead, you will have to pay a super guarantee charge (SGC) to the ATO. The SGC is non-tax deductible, attracts

interest of 10% a year and includes a $20 administration fee for each employee affected.

Unpaid superannuation used to be the responsibility of the ATO. However, this has now been passed onto the Fair Work Ombudsman. In most cases, the Fair Work inspectors will try to work with employers to correct mistakes. However, in cases where it is considered that there has been a deliberate disregard of regulations there can also be fines issued.

Individual employers can be fined up to $6600 and corporations up to $33 000. It is also worth noting that company directors are responsible for ensuring that the company pays the SG charge by the due date, and can become personally liable for the full amount if they fail to do so.

Additionally, if an employer makes a false or misleading statement on a superannuation guarantee charge statement they can be charged a painful 75% interest on the SGC amount. Some employers may also become unintentionally non-compliant in paying their employees’ SG contributions by miscalculating their income. If your business has complex or constantly changing remuneration packages, you should take extra care to ensure that your SG contributions are correct.

If you have fallen behind on your superannuation payments then you will need to lodge a Superannuation guarantee charge statement with the ATO. In some cases, if you have made a late payment to the superannuation fund you will be able to use this to offset some of the superannuation guarantee charge.