Superannuation is, and has been for a number of years, a key mechanism in ensuring employees are financially prepared for retirement. As a result of this there is a strong focus from the Government, via the ATO, in ensuring employers meet their obligations to pay superannuation appropriately. Failure to do so not only adversely impacts the employees it is designed to support, but can also expose employers, and directors, to fines and penalties.
Superannuation is a component of an employee’s salary package that is paid to a Superannuation Fund and taxed at a concessional (reduced rate). In order to boost people’s retirement savings, and reduce the burden on the welfare system, money held within super cannot be accessed by individuals until they meet a condition of release such as retirement, death or permanent disability.
Employers are required under law to pay superannuation on behalf of their employees. Employees can also choose to contribute additional amounts to it in order to save for retirement, and access tax benefits along the way.
For the 2023 financial year employers are required to pay superannuation for their employees of 10.5% of their wages. This rate will increase to 11% in the 2024 financial year, and then 11.5% in the 2025 financial year and 12% for the 2026 financial year. There is no proposal to increase the rate after this.
Superannuation payments must be received by an employee’s superannuation fund within 28 days of the end of each quarter. The due dates are 28 January, 28 April, 28 July, 28 October of each year.
If superannuation is not paid on time then you are required to lodge a Superannuation Guarantee Charge (SGC) statement with the ATO. The Superannuation Guarantee Charge is made up of the unpaid super, interest charged at 10% and an administration fee of $20 per employee. The ATO can also impose a penalty of up to 200% on the amount of SGC. The SGC liability can be reduced if the employer has paid the super directly to the employees fund before lodging the SGC statement.
Directors can be held to be personally liable for any unpaid super of a company.
Employers can only claim a tax deduction for super payments if it is paid on time. No tax deduction is available for any interest, fees or penalties that maybe imposed by the ATO
We recommend that you lodge SGC statements as soon as possible to reduce any penalties that the ATO might impose. Payment arrangements can be negotiated with the ATO in relation to paying off the debt.
Contact Maxim today to gain the help you need to navigate through this while ensuring your obligations are met.