What happens if an employer does pay super late?
Well it hurts ! There are at least 5 pain points as noted below.
- Employer will need to prepare a Super Guarantee Charge Statement
If the super payment is just 1 day late, the employer will need to prepare a Super Guarantee Charge Statement for the quarter and lodge it with the ATO. The Super Guarantee Charge (SGC) is what the employer will need to pay the ATO as a result of late payment of superannuation.
2. Late super is not tax deductible so paying late means a lost tax deduction.
3. Super now payable on overtime and allowances
The SG Charge is not calculated based on Ordinary Time Earnings (OTE) as normal super guarantee is. SGC is calculated as 11% (current SG rate) of the Gross Earnings of the employee – in simple terms, this means super is now payable on any overtime earnings – which would have been exempt from super, had it been paid on time.
4. The SGC will be made up of three amounts:
- SG Shortfall (Gross earnings X current SG rate)
- Nominal Interest (calculated on a daily basis)
- Administration Fee ($20 per employee)
However, once the total charge is calculated you can subtract the amount that was paid late to reduce the charge you owe. This is called a “Late payment offset”. The remainder will be the SGC Charge payable to the ATO.
The interest included in the above calculation is passed on by the ATO to the employee to compensate them for late payment.
5. Directors will be personally liable
It is imperative that Super is paid on time as directors will be personally liable for employee’s super guarantee!
Super payment due dates are here
Contact our office with any questions.