The 5 Things To Know About the Super Guarantee Charge

As a business owner, you have a lot of responsibilities. Not only do you need to worry about tax obligations and payroll, but you also have to stay on top of financial reporting. Although it can be a lot to keep track of, it’s important to make sure that your business is compliant with all applicable laws and regulations.

This includes staying on top of your employee’s minimum superannuation guarantee contributions. Failure to do so could result in you having to pay a super guarantee charge – a penalty incurred for not paying an employee’s super guarantee on time.

So, if you have found yourself in this position, here are a few things you need to know about the super guarantee charge.

 

Paying Your Super Guarantee In Time 

The best way to avoid paying the super guarantee charge (SGC) is to pay your employee’s super guarantee on time. In order to do this, you need to stay on top of your payment due dates. There are at least four key dates to keep in mind:

Quarter	Period	Payment Due Date
1	1 July – 30 September	28 October
2	1 October – 31 December	28 January
3	1 January – 31 March	28 April
4	1 April – 30 June	28 July

If You Miss the Deadline, You Need to Lodge a Super Guarantee Charge Statement

If you don’t meet the quarterly payment deadlines above and fail to contribute to your employee’s super fund on time, you will be required to lodge an SGC statement. The statement is essentially an ATO form that you’ll need to complete if you haven’t paid the super guarantee on time or in the correct fund.

The statement must be lodged, and the charge must be paid by the following due dates:

Quarter	Period	Payment Due Date
1	1 July – 30 September	28 November
2	1 October – 31 December	28 February
3	1 January – 31 March	28 May
4	1 April – 30 June	28 August

If you think you’re going to miss the due date as well, you can apply for a lodgement extension.

 

Late Payment Offset

The ATO does also give you the option to offset a late payment amount for one of your employees against your SGC liability if you’ve made a late payment to an employee’s fund before the SCG assessment is raised.

However, you’ll need to apply for an offset election within four years of the date of your original SGC assessment, and the ATO needs to approve the election.

Carry Forward Your Late Payment

The late payment can also be used as a super guarantee payment for the quarter when it is paid or for a future quarter.

 

You Need to Calculate the Superannuation Guarantee Charge

The penalty amount for late super guarantee payments includes:

• The super guarantee shortfall (i.e. the amount you haven’t contributed or contributed after the due date);
• Nominal interest of 10% per annum; and
• An administration fee.

To make things easier, the ATO provides employers with a super guarantee charge statement and calculator tool, which helps you determine if you’re required to pay the SGC for your employees and if so, how much that equates to.

Note: the charge is not tax-deductible.

If You Miss the SGC Deadline, Additional Penalties May Apply

According to the ATO, failure to provide the SCG statement and payment on time means you could face a further penalty of up to 200% of the initial charge. You could also face an administrative penalty if you pay less than the required SGC amount, which could be up to 75% of the shortfall.

 

Failure to Comply with the SGC Can Result in Legal Action

Suppose you don’t comply with the super guarantee charge requirement entirely. In that case, the ATO may take action in a manner they deem appropriate.

For example, they’ll set a specific time period in which you must pay the super guarantee charge. If you don’t adhere to the deadline direction, you could face criminal charges, which can mean further penalties and even jail time.

Also, the ATO may issue a “director penalty notice” that would make the director of the company personally liable for the super guarantee charge amount. From there, they may also also pursue legal action in response to the notice.

Key Takeaways

The super guarantee is a legislated amount that all employers must pay their eligible employees. The charge applies if you don’t pay the minimum amount of super into your employee’s nominated fund by the quarterly due date.

If you’re an employer and you don’t pay the right amount of super – or any super – for your employees, you may have to pay the super guarantee charge.

The best way to avoid paying the super guarantee charge is to stay on top of your deadlines. However, we understand that mistakes can happen. If you need help with your superannuation obligations, the Box Advisory Services team can assist with a range of payroll services.

Many small business owners are faced with the difficult task of balancing employer obligations with a reliable and consistent payroll function. However, by outsourcing your financials to someone who knows how to keep on top of these responsibilities, you can keep your business compliant. Plus, you can even save on the cost of hiring an HR or payroll staff member to manage your payroll needs.

If this sounds like something you may be interested in, get in touch today.

Disclaimer:

Please note that every effort has been made to ensure that the information provided in this guide is accurate. You should note, however, that the information is intended as a guide only, providing an overview of general information available to contractors and small businesses. This guide is not intended to be an exhaustive source of information and should not be seen to constitute legal or tax advice. You should, where necessary, seek a second professional opinion for any legal or tax issues raised in your business affairs.