Why Paying Super Late Can Eat Up Your Business

In business, just like in life, there are some ‘must do’s’ and then we all have a wish list of ‘nice to have’. When it comes to paying your employees superannuation, this is an absolute must do!  The
ATO have been coming down hard on businesses who do not comply, and ensuring employees are receiving the superannuation they are entitled to. The ATO completes regular audits, however in most cases, they are tipped off by employees (past and current) that their super payments have been missed, which is where costly investigations start.

If you are a small business owner, missing these payments can absolutely end up chewing through your bottom line- and for some businesses caught out doing the wrong thing for too long, it can ultimately destroy the business. It is imperative you budget for these superannuation payments and stay educated and informed about your responsibilities and any changes.

How much is the Superannuation Guarantee currently?

The current amount of superannuation guarantee- the amount employers must pay the super fund on top of their wage is currently 10% (This went up from 9.5% on the 1st July, 2021). The superannuation payments must be paid to a compliant fund within 28 days of the last quarter.

I can’t afford to pay this quarter?

Penalties immediately apply- both an administration cost and interest payments. If you cannot pay, you must lodge a SGC (Superannuation Guarantee Charge) form with the ATO within 28 days of the due date of the missed payment. You can then work with the ATO on a payment plan however fees and interest will still apply.

What are the fees for not paying on time?

If you declare this before the SGC deadline, the interest will be around 10%, plus a $20 fee per employee. If you do not declare, these fees can increase to a maximum of 200%! If you are a Director of a company, you are personally liable for the amount outstanding and the ATO can collect the penalty by other means (such as withholding tax refund). The fees and interest charged are not tax deductible.

How can I avoid getting into trouble with paying superannuation?

When employing staff, you need to factor in their superannuation costs, payroll tax etc into your budgets, and just like you pay their salaries, you need to put the superannuation away, ready to pay their fund quarterly. If you need help with this, you could enlist the help of a bookkeeper to take care of this for you, or at Sum and Substance, we can also provide you with training, tailored to your business so that you have clear directions and understanding on how to do it correctly and without penalty each quarter.

Where do I go if I need more information?

The ATO has a wealth of information which you can access online, however if you want tailored guidance for your business, We can be reached at (03) 9424 9447 or info@sumsubstance.com.au. You can directly book in a time to chat by clicking here.