You should always pay your superannuation on time as the consequences can be dire if it isn’t. This article reveals 4 common questions we hear about paying superannuation late and the consequences of doing so.
How will the ATO know if I don’t pay super on time?
With the introduction of single touch payroll (STP) in 2020, the ATO now receives information about employees directly from your business in their pay runs. The ATO can now data match this information to the information it receives from super funds for all members.
What are some of the consequences for paying employees’ super past the due date?
If super is paid late (even by 1 day), it can have dire consequences such as you no longer being able to claim a tax deduction. The amount of super payable could increase from being just payable on ‘ordinary times earnings’ to ‘total wages’. With this, directors of the company can become personally liable for unpaid superannuation amounts. If it is paid late, you must lodge a Superannuation Guarantee Charge (SGC) statement with the correct superannuation amount.
Your SGC is calculated based on how much you owe, and the calculation includes:
- The shortfall amount (the contributions not paid or paid late)
- Interest of 10% per annum
- An administration fee
What should I do if a super fund refunds payments to me?
If a superannuation payment is ‘refunded’ to the employer for something like incorrect details, you can still be liable. If details for an employee are incorrect, it is the super fund’s responsibility to refund the payment to the employer. The onus is on the employer to ensure the employees super fund information is accurate.
What do I do if I have made late payments?
Every quarter that superannuation is paid late, the administrative process required by ATO rules is very time consuming to action. You must lodge the SGC form with the ATO.
With the SGC form, you must lodge separate forms for each employee and each quarter missed. With this, it will more than likely attract penalties and interest which the employer is liable for. We recommend that you review all the information to get an overview of which employees are unpaid or underpaid as this will help conceptualise the entire amount outstanding.
If you think you will be late or will miss a super payment, contact Link Advisors and we can guide you through the process.