Paying your super late is costing you thousands of $$. Pay your super on time to avoid missing out on the tax deduction.
The ATO is cracking down on late payment of superannuation, so 2021 is the year to get on top of it if you haven’t already.
Since 1 July 2019, most employers have been required to report each pay run to the ATO electronically. Thankfully Xero (or Keypay) will do this with the click of a button. This is called Single Touch Payroll – you may have heard of it if you do the payroll yourself. If we look after your payroll, then its already in hand. This regular reporting means it will be very easy for the ATO to know if super is being paid on time or not.
The ATO can issue severe penalties for late or non payment of super. What you may not realise, is that if super is paid late, then you lose the ability to claim this as a tax deduction. Let’s say that you need to pay $10,000 super for the September quarter 2020, due on 28 November 2020. If you pay this super late (even by 1 day), you will lose the entire tax benefit of this expense. Assuming a company tax rate of 26% for 2021, this means you will need to pay $2,600 MORE tax when you lodge your 2021 income tax return. And you still need to pay the super anyway.
Super is easy to pay via Xero or Keypay. It only requires a few clicks. For this reason, we recommend our clients pay their super at the same time they do each pay run. Cashflow permitting, this means that you’ll never be late AND you won’t accumulate a big super liability requiring payment come end of quarter.
Speak to your client advisor ASAP if you have any questions about your superannuation and how to stay on top of it in 2021.