ATO superannuation compliance activity increasing

Monday 16th January 2023

ATO superannuation compliance activity increasing

Monday 16th January 2023
Written by Scott Brooks

Recently we’ve seen a sharp rise in superannuation compliance activity around late and non-payment of employee super.

This is likely due to single-touch payroll and the electronic clearing of super, giving the ATO increased visibility.

Because of this, if you’re not meeting your superannuation guarantee obligations as an employer, it could cost you as you’re more likely to receive a non-compliance letter in the post and have charges enforced.

To avoid this, we thought it would be helpful to do a quick recap of your SG obligations and the consequences of failing to meet them.

Employee super contribution dates

As business owners, we’re required to pay 10.5% of employee ordinary time earnings into their superannuation funds. Employee super contributions must be remitted within 28 days of the end of each quarter. The dates are as follows:

  • 28 January
  • 28 April
  • 28 July
  • 28 October

Importantly, super is only considered paid when the superannuation fund receives it. Processing times may vary between superannuation clearing houses, so super payments need to be made well in advance of the 28th-day deadline to ensure they’re received on time.

Cloud-based software, such as Xero, usually tells you the date they recommend payment by.

Unpaid or late payments and the SCG charge

If you fail to pay your employee super contributions by these dates, you must:

  • Lodge a superannuation guarantee charge (SGC) statement
  • Pay the superannuation guarantee charge to the ATO

The SGC is made up of the following:

  • Your superannuation guarantee shortfall (the amount unpaid, paid late or underpaid)
  • Nominal interest of 10% per annum
  • An administration fee of $20 per employee per quarter

Any late payments made for the quarter directly to the superannuation funds may be used to offset the charge.

Importantly, the nominal SGC interest accrues from the first day of the quarter until the SGC statement is lodged, not until the actual superannuation is paid. So, if this period stretches for months or years, costs can add up.

Therefore, if you pay late for any reason, you need to make sure you still lodge an SGC statement. Nominal interest cannot be reduced or waived.

Super contributions and tax deductions

You can only claim a tax deduction for employee super payments if they’re paid on time. Late payments of superannuation are not tax deductible. In addition, no tax deduction is available for any interest, fees or penalties that the ATO may impose.

Consequences of not paying the SGC charge

If you fail to lodge the SGC statement by the due date, which is one month after the super guarantee due date, a Part 7 Penalty may apply. This is 200% of the SGC.

The ATO is more likely to reduce or waive this penalty if you genuinely attempt to meet SG obligations and have a good compliance history.

If you’re unwilling to meet obligations by not responding to superannuation compliance letters, emails and calls or fail to take steps to resolve it, the ATO will take stronger action – including imposing additional penalties.

They may also issue:

An SGC liability estimate

  • A garnishee notice
  • A director penalty notice
  • A direction to pay SGC
  • An education direction to complete the super guarantee employer obligations course

Can’t pay? Lodge and discuss

If you’re having difficulties paying your employee super contributions, you should make a voluntary disclosure by completing and lodging an SGC statement.

The faster you lodge, the less the nominal interest will be.

If you’re experiencing difficulties in paying, you can phone the ATO directly to discuss your circumstances – or we can do it for you.

If you have late or unpaid superannuation, contact us immediately to discuss.