Do you understand exactly how the late payment or non-payment of superannuation contributions can affect your business? Since the introduction of Single Touch Payroll, and the end of the super guarantee amnesty, the Australian Tax Office is actively following up on required super contributions.

With the recent changes to the way the ATO applies penalties for late super contributions, you need to be aware of your legal requirements.

“Superannuation contributions must be received by the superannuation fund within 28 days of the end of a quarter,” says John Jeffreys from the Tax Counsel. “There is a common misconception that superannuation contributions must be paid by the employer by the 28^th day after the end of the quarter. This is not correct. It is the date of receipt by the superannuation fund that is important. However, if you are using the ATO Small Business Clearing House and if the contributions are received by that clearing house by the 28^th day following the end of the quarter, you will be treated as having made the contributions to the superannuation fund on time.”

If businesses pay late or not at all, the Australian Superannuation Guarantee system will impose a severe penalty on employers.

Employers must pay, at least, the Superannuation Guarantee Charge (SGC).  For a quarter this is:

1. The late superannuation contributions; plus
2. Extra contributions due to a higher earnings base being used; plus
3. 10% interest calculated from the beginning of the quarter to the time of lodgment of the Superannuation Guarantee Statement or assessment; plus
4. A $20 charge per employee.

Businesses can also be penalised — in addition to the SGC — if they have not lodged a Superannuation Guarantee Statement (SGC) with the ATO. Penalties may be up to 200% of the Superannuation Guarantee Statement.

“Both the SGC and the penalties are not tax-deductible,” explains Mr Jeffreys. “It will often be the case that the combined after-tax amount of the SGC and penalties is many multiples of the superannuation contributions paid late.”

Are you concerned about the non-payment of superannuation contributions? Give our team at Meridian Accounting & Business Services a call to discuss your superannuation contributions. You may phone our Rockhampton office on (07) 4927 4625 or our Emu Park office on (07) 4938 8262. Our team specialise in smart solutions for small to medium businesses in Central Queensland — and we’re ready to assist you.