If you are expecting leniency around super guarantee payments in these challenging times, we’re sorry to be the bearer of bad news! The penalties for failing to pay employee super on time and in full are now heftier than ever.
Here’s what you need to know if you’ve paid late or not at all – and why you need to take action immediately.
Business owners need to be aware that the ATO is taking a zero-tolerance approach to late or missed superannuation guarantee (SG) payments. Back in September 2018, the ATO instated an SG amnesty, allowing businesses the opportunity to bring late or unpaid super payments up to date. The SG amnesty closed on 7 September 2020, and the situation is now unforgiving, to say the least, for employers who fall behind.
Penalties for late super payments
Even if you’ve only paid one day late, you can expect the usual tax deduction to be voided. You could also be liable for a penalty of up to 200% of the super guarantee, as well as interest and admin fees.
On top of that, where superannuation is paid late, businesses will have to pay super on ordinary time earnings AND any other earnings, such as overtime or bonuses. (When super is paid on time, only ordinary times earnings is subject to the superannuation guarantee.)
Interest charges in the range of 8% to 10% will be applied for the time your employees’ super remains unpaid. A $20 admin fee applies for every employee who has been paid late. All of these costs are non-deductible.
What to do if you’ve paid super late
If you’re aware that you’ve paid late, you will need to complete and lodge the Super Guarantee Charge Statement within one month of the due date.
Doing so will immediately put you on the ATO’s audit radar. However it’s a far better course of action than doing nothing and hoping it will go unnoticed – it won’t! Thanks to the Australian Government’s ever-expanding data-matching program, which now includes access to Single Touch Payroll reporting, there are more ways than ever for the ATO to assess levels of voluntary compliance.
More importantly, an unintentional late payment should be an indication that your internal systems need to be reviewed. It could be a cash flow problem, a fault in your payment system, or perhaps something more sinister. Action needs to be taken quickly before a bad situation gets worse.
If you use a super clearing house, you’ll need to investigate why they have paid late on your behalf. This is unlikely for businesses that use the ATO’s own clearing house (available for businesses with up to 19 employees), but for larger employers who use other clearing houses, it is cause for investigation.
Ongoing late payment of super
Employers who consistently pay late or fail to pay at all and don’t complete the notification form will attract significant penalties that are on average around 40% but can be as much as 200% of the amount of super owing.
Ongoing non-payment can also become personal for company directors as the ATO can apply the Director Penalty Notice (DPN) regime to make them personally liable if their business fails to pay on time or lodge the appropriate form.
If you’ve been guilty of paying super late in the past, please contact us immediately so that we can assist you to create a plan to rectify the situation.
Review your internal systems to check when payments are being lodged by your in-house team.
Using a super clearing house? If so, check your lodgement arrangements and ascertain when super needs to be received by them for payment.
If you’re unable to make current and future Super Guarantee payments, we recommend conducting an immediate financial management review to identify cash flow and solvency issues. If you suspect fraudulent activity, now is the time to take steps to implement an audit.
As always, if you need advice or help with any of this, please give us a call.
Core Business Accountants specialise in business advice for growing and mature family-owned and small and medium-sized businesses. If you need business advice about any of the above topics, please get in touch with us on (07) 5438 8088, email firstname.lastname@example.org or visit www.corebusiness.com.au.