If you do not pay an employee’s superannuation by the due date, you must lodge a superannuation guarantee charge (SGC) statement and pay the SGC to the ATO. The due date for paying superannuation is 28 days after the end of the quarter in which the superannuation was incurred.
So how do you lodge an SGC statement and what are the consequences of paying superannuation late.
Lodging an SGC statement
If you don’t pay superannuation when due you have to lodge an SGC statement. An SGC statement must be lodged within one month of the superannuation being due for payment.
You can either ask your accountant to lodge an SGC statement, or you can use the documents provided on the ATO’s website.
The ATO will raise interest and penalties
In addition to paying the core superannuation debt, if you pay superannuation late and lodge an SGC statement the ATO will also charge:
- Nominal interest of 10% per annum; and
- An administration fee of $20 per employee, per quarter.
If you lodge an SGC statement late the ATO can also levy penalties with the maximum penalty being 200% of the SGC payable. The ATO can also levy additional penalties in some circumstances.
Superannuation is not tax deductible
If you do not pay an employee’s superannuation on time, then the superannuation ultimately paid is not tax deductible, meaning you will ultimately pay more tax.
Superannuation is payable on overtime
Superannuation is generally only payable on ordinary time earnings which generally does not include overtime. However, if you do not pay an employee’s superannuation on time then SGC amounts are calculated on all employees’ salary or wages including overtime. This means you will ultimately have to pay more superannuation than if the superannuation was paid on time in full.
You don’t get a credit for superannuation paid if an SGC statement is not lodged within four years
If you pay superannuation to an employees’ superannuation fund late you still need to lodge an SGC statement. You generally will get a credit for the superannuation paid. However, if you lodge an SGC statement more than four years late where you have paid superannuation after the due date, you will not get a credit for the superannuation you have already paid.
You can get a director penalty notice
Under the ATO’s director penalty notice regime, company directors can be personally liable for a company’s unpaid superannuation. The unpaid superannuation is payable to the ATO as SGC and the ATO can issue a Director Penalty Notice for unpaid SGC.
Where SGC statements have been lodged on time, directors have 21 days from the date of the Director Penalty Notice to place a company in external administration to avoid liability for SGC. However, where SGC statements have been lodged late, or not at all, directors are automatically liable and must pay any unpaid superannuation.
Contact us for a confidential, no cost and no obligation discussion
If your company is struggling to pay superannuation and/or in financial difficulty then get in touch with us. We can discuss any issues which you have in an initial no-cost, no obligation, confidential discussion.
