Superannuation payments – Pay on time, every time, no excuses!
With the implementation of single touch payroll, the ATO has real time data of wages paid, super due and receipts by super funds. This means now more than ever Superannuation must be paid on time.
We’ve helped many small businesses implement systems to embrace single touch payroll by moving to cloud accounting with Xero or MYOB and gaining the additional benefits of time, knowledge and control of their business.
The ATO has been supportive and patient with businesses getting on board.
We’re here to help and expect that more of our clients will want to get their processes accurate and efficient.
Until now, the odd slip of a few days late due to admin issues or even up to a month or two as a business manages cashflow constraints has largely slipped through as long as obligations have been paid but with real time information, the ATO is cracking down on late super payments.
Paid on time means received by the super funds for 100% of employees. This is not the day the payment leaves your bank account but is the day the cash is received by the super fund. You may need to add as much as 7-10 days processing time.
Late payment of superannuation triggers the Superannuation Guarantee Charge (SGC) under s.17 of the Superannuation Guarantee (Administration) Act 1992. The implications and complications of this charge are many and include:
- Submit a SGC form to the ATO for each quarter and each employee for which super was paid late.
- Pay a 10% interest charge on the late super until the date of payment from the first day of the quarter (yes, pay 1 day late on 29 October and you’ll pay 10% interest on the full balance due starting 1 July).
- Pay a $20 admin fee per employee per quarter.
- Recalculate super on all earnings, not just ordinary time earnings. This means some overtime and bonuses that did not require super payments now do. Yes, add the 10% interest charge on top.
- Possibly pay a penalty for failing to lodge a Superannuation Guarantee statement, equal to double the amount of the SGC, that is, up to 200 per cent of the SGC payable
- Pay general interest charge (GIC) on the unpaid amount.
- Director’s may become personally liable for late super.
- Aside from the GIC on any late payment of the SGC, any amounts payable are non-deductible including the Part 7 penalty.
These implications are massive and bordering on ridiculous in their scope, however the law is the law. Our aim is to help you comply and make sure you don’t encounter the issue in the first place.
You may be able to calculate and make use of a superannuation guarantee charge offset to diminish your liability. This isn’t straightforward and is calculated per employee per quarter, so if you have had staff turnover that will need to be factored into calculations.
We’re seeing ATO compliance activity from FY19 and we expect to see real time action in FY20.
In one example a business paid all their super for all employees during the year however paid two quarters late – in one instance a single day late and the other a week late.
Late payment is late payment. The Superannuation Guarantee Charge is a circus best avoided. We’re here to help you avoid the circus.
Our in-house bookkeeping, cloud accounting and business process experts Tash Black and Mel Wilkinson can assist with payroll set up or implementing systems that will help you keep your business finances and payroll and superannuation obligations on track
Super – pay on time, every time, no excuses.