How to Avoid the Costly Consequences of the Super Guarantee Charge

We are starting to see the ATO enforcing the Super Guarantee Charge on late Super. Business owners who have paid late receive a letter from the ATO informing them that they need to lodge a “Super Guarantee Charge Statement (SGC)”.

This statement is issued when the ATO detects late or no superannuation payments to your employees – which can be years after the fact. Super is declared as paid when it hits the employee’s fund, not when you process it through your clearing house, so to avoid the charges, it is imperative that you make your super payments with, at a minimum, a week to spare.

The penalties for paying super late are as follows:

• A non-deductible Interest on the total amount of super paid late, charged at 10% P.A
• A non-deductible $20 admin fee per employee per quarter.
• The loss of tax deductibility for all Super that was paid late.

This is a self-reporting regime, the sooner you notify the ATO the less interest you will pay.

Here is an example of the penalties that can occur.

Company Pty Ltd has 8 employees and 2 directors on payroll. They had a super obligation of $10,000 for the September 2022 quarter due on 28^th Oct 2022.

They processed their super payment on the 26^th Oct but it did not hit the employees fund until the 31^st Oct. They realised their super was paid late and lodged a SGC statement on the 30^th Nov 2022. The total cost to their business is as follows

Admin Fee                                                           $200      (10 employees * $20)

Nominal Interest                                                $83        ($10000 * 10% P.A)

Additional Tax (due to no deduction)          $2500   ($10000 * 25% Tax Rate)

Total Cost to Business                                      $2783

If you have received a letter or are concerned and would like us to review your superannuation payment dates and lodge the form please do not hesitate to contact our team on 08 81721444