Employer Super Guarantee Obligations

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As an employer, you have an obligation to contribute superannuation on behalf of your employees, but do you know what penalties are imposed, should you fail to make contributions?

Failure to make payment of employee superannuation contributions can result in detrimental consequences, enforced by the Australian Tax Office (ATO).

If super contributions are not paid or paid late, employers are required to lodge a Super Guarantee Charge (SGC) statement, which consists of three financial components:

  1. The Super Guarantee shortfall amount;
  2. The nominal interest on those amounts (currently 10%); and
  3. An administration fee of $20.00 per employee, per quarter.

Notable items for employers making late super contribution payments include:

  • The entire SGC amount (all three components) is not tax deductible.
  • General Interest Charges will continue to accrue until the SGC is paid.
  • The ATO can impose other penalties such as a ‘Penalty for Failing to Provide an SGC Statement’ of up 200% of the SGC payable.
  • Directors can be held personally liable for shortfalls.
  • Garnishee Notices can be issued, advising a bank to withhold money from the employer’s bank account to collect the SGC payable.
  • ‘Direction to Pay’ can be issued for the SGC payable, and failure to comply with a Direction can result in penalties or imprisonment.

The introduction of the Single Touch Payroll (STP) system has thoroughly improved the ATO’s ability to detect late super contribution payments, so it is highly recommended that employer’s who have not met their super obligations in the past take necessary action to rectify this situation as soon as possible.

To mitigate the risk of incurring the above-mentioned consequences, we strongly recommend employers priorities and pay super guarantee monthly. To assist and simplify this process, a range of software providers, such as MYOB and Xero, offer basic files specifically for STP from only $10 per month.

We encourage you to contact our office and speak to one of our knowledgeable professionals if you have any queries.

Your trusted advisors at Archangel Wealth.

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