What happens if an employer does pay super late?

Well, it hurts! There are at least 5 "pain" points.

1. 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 the employee’s super guarantee!

Super payment due dates are here.

Default Super Funds No Longer The Go-To For Employers

Employers can NO LONGER use a default fund for new employees if they do not nominate a fund – the employer MUST make contact with ATO to source details of the employees stapled fund.

From 1 November 2021, employers may need to request their ‘stapled super fund’ details from the ATO.

Most employers from 1 November 2021, may have an extra step to take to comply with choice of fund rules if:

• they have new employees start, and

• the employees do not choose a super fund.

The employer may now have to request their new employees ‘stapled super fund’ details from the ATO.

A stapled super fund is an existing super account which is linked, or ‘stapled’, to an individual employee so that it follows them as they change jobs.

The change aims to stop new super accounts from being opened every time an employee starts a new job.

More information here.

Need help? Contact your Infinity FC accountant who can apply directly to the ATO for you.

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