Client Alert – Superannuation Guarantee Obligations
The Australian Tax Office audit activity has increased on Superannuation Guarantee obligations.
Superannuation Guarantee – General Guidelines
Generally you have to pay superannuation for your employees if they are between the ages of 18 and 69 (inclusive), and you pay them $450 or more (before tax) in a month. If you are required to pay an employee and they are under 18, they also must work at least 30 hours per week.
The minimum super you must pay is 9% of each eligible employee’s ‘ordinary time earnings’. You can elect to pay your employee’s superannuation either monthly or quarterly, however as a minimum it must be paid by the 28th day after the end of the quarter:-
| Quarter Ending | Payment Due By |
| 31st March | 28th April |
| 30th June | 28th July |
| 30th September | 28th October |
| 31st December | 28th January |
If the cut-off dates for payment of superannuation are not met:
If you fail to pay the minimum amount into the correct fund by the due date, you will be required to lodge a statement and pay the Superannuation Guarantee Charge to the Australian Taxation Office.
The Superannuation Guarantee Charge consists of the following components:
- Superannuation Guarantee Shortfall;
- Interest charged at the rate of 10% from the commencement of the relevant quarter;
- An Administration Charge of $20.00 per employee per quarter.
Other penalties include:
- The Australian Taxation Office can also apply a further penalty of up to 200% of the Superannuation Guarantee shortfall.
- Directors are now personally liable for outstanding liabilities on Company Liquidations and PAYG Withholding.
- If you pay the superannuation guarantee late you cannot claim a tax deduction for the amount paid.
Superannuation choice
If a new employee is eligible to choose a superannuation fund, you must provide them with a Standard Choice Form within 28 days from the day they started working for you.
If your employee does not choose a fund, you must pay their superannuation contributions into the fund you have identified as your employer nominated fund (also known as your default fund) within the nominated time frames stated above.
Superannuation choice – penalties
The Australian Taxation Office can apply a penalty of 25% of the superannuation due (up to a maximum of $500.00) per employee per quarter if Superannuation Fund choice is not offered or the employer fails to comply with the employee’s chosen fund.
Disclaimer
This information is intended to be general in nature to highlight some of the basic current issues in superannuation. Your obligations are quite extensive and this area of law should not be treated lightly.
Should you have any queries regarding the above or require assistance with compliance aspects associated with Superannuation Guarantee, please contact your Accountant.