ATO Cracks Down on Superannuation Guarantee

Superannuation Basics – What and how much?

Employers in Australia generally have an obligation to make superannuation guarantee payments on behalf of their employees at a current rate of 11% of the employee’s ordinary time earnings. This rate is currently legislated to increase incrementally to 12% by the 2025.

Superannuation guarantee payments are currently due to be made on at least a quarterly basis, 28 days after quarter end. The due dates are as follows:

Quarter ended 31 March – due 28 April
Quarter ended 30 June – due 28 July
Quarter ended 30 September – due 28 October
Quarter ended 31 December – due 28 January

Importantly these are the due dates by which the funds need to be RECEIVED by the superfund. So you should action this payment a few days before the due date, to allow for processing time.

Note that the current Labour government have announced the intended introduction of “Payday Superannuation” whereby from 1 July 2026 employers will have to make employee superannuation payments on the same day as their employees are paid their wages.

How easy is it for the ATO to know I have missed a payment?

The ATO has access to much more real-time data on when superannuation payments have been made, ever since payments were required to be “SuperStream” compliant, around 8 years ago.

Coupled with Single Touch Payroll providing real-time information on wages payments to employees, it is now very easy for the ATO to identify unpaid or incorrect superannuation payments, and pursue the offending employer.

What happens if I miss a payment?

If you pay your superannuation late the ATO requires you to disclose this by lodging what is known as a Superannuation Guarantee Charge (SGC) Statement. The SGC is also calculated differently than the normal super guarantee which can increase the amount considerably.

The calculation for SGC comes to:

11% of all gross wages reported for the quarter (not limited to Ordinary Times Earnings)
Plus interest charged at 10%
Plus an administration fee of $20 per employee

The ATO have stated that they will likely apply a Part 7 penalty of 100% of the SGC amount, and also may apply a penalty of up to 200% of the SGC calculation in certain cases. Further to this, SCG payments are NOT tax deductible.

You will receive a credit for any superannuation paid prior to the due date, and a can claim a further credit for superannuation paid late. However the late payment credit is applied after the interest and penalties have been applied on the SGC. The late payment is also not tax deductible.

Example:

Say your company has 5 employees and in the quarter they were paid $100K for their normal hours and also $20K in overtime. Their combined quarterly superannuation guarantee amount is $11,000. If you pay this on time you get a tax deduction worth $2,750, leaving you a net payable of $8,250.

But if you miss this payment, the SGC increases the payable considerably. Firstly, super now has to be paid on the overtime, so there’s an extra $2,200. Then there is the admin fee and SGC late fee coming to a total of $220. Then finally there is the lack of a tax deduction available. Meaning the total outlay is $13,410 – an extra $5,160 just for being late!

Super Guarantee Example Oct 23

What if I still can’t pay?

Most concerning is that if an employer company or trust does not pay superannuation and does not lodge a SGC statement within 3 months of the due date, the ATO can pursue this debt and can make it a personal liability of the directors.

This demonstrates the severity of the penalties for late payments, underpayment or non-payments of superannuation guarantee for your employees, and reiterates the importance of paying superannuation obligations on time and in full.

To clarify details around superannuation guarantee for your business our team at BLG Business Advisers is available to assist you. Don’t hesitate to reach out for a chat for guidance on this important area of your business!