19th Jul, 2010
What to do if you haven’t met your superannuation obligations on time.
If you haven’t met your super obligations as an employer, you have to lodge a Superannuation guarantee charge statement – quarterly (NAT 9599) and pay a SGC to the ATO. There are substantial penalties for not paying your employees Superannuation correctly and on time.
Failing to meet your obligations
The SGC is a charge you have to pay to the ATO if you fail to meet your super obligations. You will have to pay it if you:
- do not pay enough super contributions (at least 9% of ordinary time earnings) for your employee (this is called a super guarantee shortfall)
- do not pay super contributions by the quarterly cut-off date for payment
- do not pay super to your employee’s chosen super fund (this is called a choice liability)
- pay a super contribution to a fund after the cut-off date for payment.
The SGC is made up of three parts:
- super guarantee shortfall amounts (including any choice liability)
- interest on that amount (10% per annum) until matter resolved
- an administration fee ($20 per employee per quarter) until matter resolved.
The SGC is not tax deductible and can cost you tens of thousands of dollars.
What you must do
If you have not met your obligations, you must lodge a Superannuation guarantee charge statement – quarterly by the due dates.
When a cut-off date for payment falls on a Saturday, Sunday or public holiday, you can make the payment on the next working day after the cut-off date.
Once you lodge a statement and pay the SGC, the ATO will transfer the super guarantee shortfall amount and any interest to your employee’s chosen super fund.
If you pay a super contribution after the cut-off date
Even if you make a late payment, you must still lodge a SGC statement and pay the SGC to the ATO. Penalties apply if you fail to comply.
You will generally be able to offset amounts paid late to a super fund against the SGC.
Paying the super guarantee charge and other penalties
It is much better for you and your business if you pay super contributions on time. If you don’t:
- you have to pay
- interest on the super contribution (10% per annum)
- an administration fee ($20 per employee, per quarter)
- the super guarantee shortfall
- you also incur the general interest charge (GIC) if you are late in lodging and paying your Superannuation guarantee charge statement – quarterly
- you have to put time into preparing a Superannuation guarantee charge statement – quarterly and calculating the charge
- the charge (including any super guarantee shortfall) is not tax deductible, unlike most super contributions.
As well as the SGC, there are several other penalties and charges that might apply, depending on your circumstances.
If you don’t meet your choice of super fund obligations, including paying your employee’s super contributions to the correct fund, you may be liable for a choice liability. The choice liability is part of the SGC.
Late payment offset elections
Any amount claimed as a late payment offset is not tax deductible.
General interest charge
If you lodge the Superannuation guarantee charge statement – quarterly but don’t pay the SGC by the due date, you incur an additional charge. This is called the GIC, and it accrues from the date your SGC is due up to the date you pay your SGC account in full. The GIC is calculated on a daily compounding basis and is tax deductible in the year you incur it.
Administrative penalty
If you pay less SGC than you’re liable to pay because you made a false or misleading statement, in addition to charging you the shortfall itself, we can impose the base penalty amount of 75% of the shortfall.
The penalty is called an administrative penalty. This base penalty amount can vary according to your circumstances.
Failing to keep records
If you fail to keep adequate records, and you are convicted of this offence, there is a maximum fine of $3,300 for an individual and $16,500 for a corporation. You may also be liable for an administrative penalty of $2,200.
Not providing a Superannuation guarantee charge statement – quarterly when required
If you are audited and don’t provide a statement or information when we ask for it, you may incur a penalty. The maximum penalty is 200% of the amount of the charge payable.
Arrangements to avoid your obligations
If you enter into arrangements to avoid certain obligations, such as your liability for the SGC, you may incur the charge you avoided and also an additional penalty. We can vary the base penalty according to your circumstances.
Source: http://www.ato.gov.au/print.asp?doc=/content/19818.htm
