Your business could be at risk of a very expensive super audit!

Your new cash flow priority each quarter needs to be your super obligations, and here's why... 

Photo: Unsplash.com


Previously "when the ATO audited an employer to check whether they had SG obligations, it would almost be like a self-correction, so  if the employer paid it and fixed it up then it would be okay. Now when they audit employers, they’re applying the full suite of penalties”

- Insyt chief executive Darren Wynen


Your super obligations as an employer:


The minimum you must pay is called the "super guarantee " or "SG":

  • The SG is currently 9.5% of an employee’s ordinary time earnings
  • You must pay the SG at least four times a year, by the quarterly due dates
  • You must pay and report super electronically in a standard format, ensuring you meet SuperStream requirements
  • Your super payments must go to a complying super fund – most employees can choose their own fund
  • If you don’t pay the SG on time, you may have to pay the super guarantee charge.


Important to note: Super is only considered “paid” when it is received in the account of the employee, NOT the outgoing payment is made on your end. 


Penalties still apply if the money is not in the account of the employee by the due date, even if you made the payment . Therefore – payments can’t be made from your end on the due date – it must be done at least a few days in advance to allow processing time.  


If you DON’T meet your obligations there's a "Super Guarantee Charge (SGC)":


The charge is made up of:

  • SG shortfall amounts (including any choice liability calculated on your employee’s salary or wages
  • Interest on those amounts (currently 10%)
  • An administration fee of $20 per employee, per quarter.

Those costs can add up very quickly, particularly if you have many employees, or many years of outstanding super guarantee payments overdue (or, unfortunately, both). 


Here's a case study right from the horse's mouth, this example is from the ATO website:


In the quarter from 1 July to 30 September 2009 (when SG was 9%), the employer did not pay any SG contributions. As a result of an employee enquiry about their unpaid super, we audit the employer for the September 2009 quarter. Our audit occurred several years later and was completed on 5 August 2013.

We calculate the employer's SGC liability on the full salary and wage amount (not just OTE), and each employee receives nominal interest of 10% on that amount, calculated from the start of the quarter the SG wasn't paid.

Total salary and wages (for 30 employees): $375,000

Total SG shortfall:

$33,750 ($375,000 × 9%)

Total choice liabilities:

$0.00

Nominal interest:

$13,832.65

Administration fee:

$600

Total SGC:

$48,182.65


Additionally:

  • The general interest charge (GIC) will accrue until the SGC is fully paid
  • A penalty may be imposed on the employer for failing to provide an SGC statement or information relevant to assessing their liability.

As a result of all this, the employer has incurred more than $21,000 in additional, non-deductible costs

Payment Dates:

We definitely recommend these go in your calendar. Preferably bolded and underlined. Even better, set a reminder to go off a week prior, to ensure the payments are definitely in your employees' accounts before the due date. 

Quarter

Period

Due date


1
1 July – 30 September
28 November
2
1 October – 31 December
28 February
3
1 January – 31 March
28 May
4
1 April – 30 June
28 August


.
The ATO is most willing to help out someone that's behind on payments when they are upfront and cooperative about managing their debt. We recommend you alert the ATO as soon as you know there are issues, complete and submit any paperwork, and ask a trusted advisor for help. 

If you would like the help of an experienced tax agent, get in touch with us! We have helped business owners through the auditing process, and know how everything works.