Made a late super payment? Here’s what happens if super isn’t paid on time.

For Australian business owners, making a late super payment comes at cost. 

With the ATO’s increasing capability to monitor, data match and enforce the legislation it’s important for business owners to understand how this affects them. 

Late payments of superannuation, or ‘super’, can lead to significant legal and financial consequences, affecting not only the financial health of the business but also its reputation. Understanding the implications of late super payments is crucial for maintaining a healthy business operation…and manageable stress levels!

Legal and Financial Implications

When super payments are not made on time, business owners have to lodge the Superannuation Guarantee Charge (SGC) Statement. 

What is a Superannuation Guarantee Charge (SGC) statement?

The Superannuation Guarantee Charge (SGC) statement is a 5 tab spreadsheet   Australian employers must submit to the Australian Taxation Office (ATO) when they have not paid the minimum required superannuation contributions for their employees by the due date.

We’re not going to sugar coat it –  it’s tedious and time consuming. If you ask your bookkeeper to help you lodge the SGC, be sure to check in with them to see how much this will cost so you can set aside the invoice amount. 

The purpose and definition of the SGC statement can be broken down into its core components

Compliance: It’s a tool to encourage employers to comply with superannuation laws by fixing missed or late superannuation payments ASAP. It’s a part of the regulatory framework designed to make sure employees receive the super contributions they’re entitled to for their retirement savings.

Calculation of Liabilities: The statement helps in calculating the exact amount of superannuation guarantee charge the employer owes. This includes the superannuation shortfall amounts, nominal interest on those amounts (currently set at 10% per annum), and an administration fee of $20 per employee, per quarter

Important: We have seen lots of business owners get caught by not allowing enough time for their super payments to be processed.

Even if the late super amount is paid, the SGC statement still needs to be lodged and the admin fee and interest still apply.  The payment needs to be received by the fund by the due date…and not a day later!

We suggest allowing 10-14 days for this to happen. So, if the super due date is 28th April, you should pay it by the 10th-14th April to make sure it reaches the fund in time.

You can find more information about this, as well as the SGC Statement spreadsheet here and see a relevant article from Accountants Daily here.

  • Payment and Rectification:

By submitting an SGC statement, employers can pay the outstanding amounts to the ATO, who then distribute the funds to the employees’ super accounts so they don’t miss out on their super contributions because of the employer’s late payments.

  • Penalty Enforcement: The SGC statement system is also a deterrent against late payments, because the charges can be significant. It’s a reminder to always meet superannuation payment deadlines.

Besides chewing up your time,  late super payment can impact your team and business reputation 

Employees value correct contributions to their super funds, and if that doesn’t happen it can lead to dissatisfaction and break trust, potentially impacting employee retention and your business’s reputation.

Instructions for Managing Late Super Payments

Step 1: Identify and Assess the Late Payment

  • Immediately review your payroll records so you know the total amount of outstanding super and the length of the delay. Review the super payment dates and compare the amounts that should have been paid, against what was actually paid.
  • The ATO does not offer a grace period for super payments. The payment must be received by the ATO by the due date, without exception and the longer you wait to lodge the SGC statement, the more expensive it gets.

Step 2: Let relevant people know

  • If you work with a bookkeeper or accountant, let them know about the late super payment. If you manage your business’s finances, let your employees know and let them know you’re prioritising fixing the issue. 

Step 3:  Check your award

If you felt like you were confused, we have another curve ball for you. In some cases, the Fair Work Award system overrides the Super laws.  Here is an example from the Building and Construction award from the Fair Work Ombudsman

“ Building and Construction workers must have the super paid into one of the nominated funds in the award and must be paid monthly. 

28.4 Superannuation fund

Unless, to comply with superannuation legislation, the employer is required to make the superannuation contributions provided for in clause 28.2 to another superannuation fund that is chosen by the employee, the employer must make the superannuation contributions provided for in clause 28.2 and pay the amount authorised under clauses 28.3(a) or 28.3(b) to one of the following superannuation funds or its successor:

(a) Construction and Building Industry Super (Cbus);

(b) Building Unions Superannuation (Queensland) (BUSS(Q));

(c) AUST(Q);

(d) AustralianSuper;

(e) CareSuper;

(f) Tasplan;

(g) SunSuper;

(h) Statewide Superannuation Trust;

(i) any superannuation fund to which the employer was making superannuation contributions for the benefit of its employees before 12 September 2008, provided the superannuation fund is an eligible choice fund and is a fund that offers a MySuper product or is an exempt public sector superannuation scheme; or

(j) a superannuation fund or scheme which the employee is a defined benefit member of.

If this is clear as mud, don’t feel bad – you’re a business owner not a bookkeeper!  Outsourcing to a professional can save you time and money.

Read this to find out more about the two types of business owners when it comes to outsourcing

Step 4:

Calculate and lodge your SGC 

  • Calculate the SGC: Accurately calculate the total amount due, including the super owed, nominal interest, and admin fees.
  • Lodge the SGC Statement: Complete and lodge the Superannuation Guarantee Charge Statement with the Australian Taxation Office (ATO) to officially report and rectify the late payments. 

Step 5: Set up Preventative Measures

  • Review and Revise Payroll: While you can automate payroll, super must be paid via a super clearing house – this usually happens after the pay run is done and lodged via STP. Set aside the adequate time to review super so it’s ready to go before the deadline.  
  • Stay Informed: If you are going to DIY superannuation, be sure to stay informed about compliance obligations

Step 6: Seek professional advice

  • Seeking advice from your bookkeeper who is experienced in Australian superannuation law and can provide tailored strategies to manage and prevent late payments, as well as help you complete the Super Guarantee Charge can save you from doing all of the above yourself. This would be an out of scope service for most bookkeepers, so be sure to ask for a price so you can budget accordingly.

Conclusion

Phew! You can see late super payments are a heap of work and can lead to significant legal, financial, and reputational risks. By taking steps to make sure your super is paid on time, business owners are securing their employees’ financial futures, keeping compliant, and keeping their business’s reputation. 

Partnering with a bookkeeper can provide unparalleled assistance in managing your bookkeeping and finances effectively. However, it’s essential for business owners to understand the ultimate responsibility for superannuation payments remains with them.

Want to chat about Superannuation and how you can manage it best? Get in touch

Like this article?

Share on Facebook
Share on LinkedIn
Share on Pinterest

you may also like...

Contact Us

Ready to take your books and business to smooth operator level? Smart choice!

Contact Us

Ready to take your books and business to smooth operator level? Smart choice!

Contact Us

Ready to take your books and business to smooth operator level? Smart choice!

Contact Us

Ready to take your books and business to smooth operator level? Smart choice!