Failure to pay superannuation on time can have a long-lasting negative impact on your reputation, and on your employer brand.
Since the introduction of Single Touch Payroll (STP), it has never been easier for the Australian Tax Office (ATO) to have oversight of employers’ Super Guarantee (SG) contributions and the ATO is paying attention!
In 2016-17 it was estimated that 2.85 million Australians were short-changed $5.95 billion in super entitlements1. To address this, the Government had an unpaid super amnesty that ended on 7 September 2020. Now that date has passed, it is timely to get up-to-date with the current penalties for unpaid super.
Not paying SG on time can be very costly2 and not only result in the amount not being tax deductible, but also in the following Super Guarantee Charge (SGC) penalties being applied:
- 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 quarter3
The ATO can issue employers with a direction to pay outstanding SGC (or estimates of SGC) within a specified period. When an employer receives a direction to pay, they must ensure that they pay the full amount specified in the direction. A failure to comply with the direction is a criminal offence and can result in fines up to $10,500 or 12 months’ imprisonment4.
The director of a company that fails to meet an SGC liability in full by the due date automatically becomes personally liable for a penalty equal to the unpaid amount5.
If you are having difficulty in paying super for employees, the ATO can provide payment options for your circumstances. The ATO will look more favourably if you address the situation with them rather than an employee reporting it.
Keeping on top of your SG payments
As an employer, the Super Guarantee (SG) legislation requires you to pay superannuation contributions on behalf of your employees into a complying super fund. The current SG rate is 9.5% of your employees’ Ordinary Time Earnings, and is currently slated to increase to 10% by 1 July 2021.
You must pay it at least four times per year, by the quarterly due dates, alternatively it could be easier to pay them more regularly, like monthly, or fortnightly for your permanent staff members.
Help and support
We understand that super is not always straight forward, that’s why our team of real estate focused super experts are here to help advise and answer those tricky questions.
Get in touch with one of our Business Development Managers today.
We’re here to help.
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The information contained in this article does not constitute financial product advice. However, to the extent that the information may be considered to be general financial product advice, REI Super advises that REI Super has not considered any individual person’s objectives, financial situation or particular needs. Individuals need to consider whether the advice is appropriate in light of their goals, objectives and current situation. Members should obtain and read the Product Disclosure Statement for REI Super before making any decisions. REI Superannuation Fund Pty Ltd ABN 68 056 044 770 AFSL 240569. RSE L 0000314 REI Super ABN 76 641 658 449 RSE R1000412 MySuper unique identifier 76641658449129. April 2021.