• Home
  • Services
    • Accounting
    • Bookkeeping
    • Business Coaching
    • Business Improvement Services >
      • Face to Face Workshops
      • Virtual CFO
    • Corporate Admin
    • Superannuation
    • Taxation
    • Training - Xero
  • About
    • Our team
  • Contact
  • Tax Checklists
  • Blog
Preston Corporate Accounting
  • Home
  • Services
    • Accounting
    • Bookkeeping
    • Business Coaching
    • Business Improvement Services >
      • Face to Face Workshops
      • Virtual CFO
    • Corporate Admin
    • Superannuation
    • Taxation
    • Training - Xero
  • About
    • Our team
  • Contact
  • Tax Checklists
  • Blog

Blog

EMPLOYEE SUPER DUE SOON!

9/4/2021

 

Late Superannuation Contributions are a Bad Deal for You 
We would like to save you the pain and expense of making late superannuation contributions for your employees, or not paying them at all.  There have been recent changes to the way the ATO applies penalties when superannuation contributions are paid late, and we would like you to be aware of the significant expense that can result. 
 
When must superannuation contributions be paid? 
Superannuation contributions must be received by the superannuation fund within 28 days of the end of a quarter.  There is a common misconception that superannuation contributions must be paid by the employer by the 28th day after the end of the quarter.  This is not correct.  It is the date of receipt by the superannuation fund that is important.  However, if you are using the ATO Small Business Clearing House and if the contributions are received by that clearing house by the 28th day following the end of the quarter, you will be treated as having made the contributions to the superannuation fund on time.
 
Why it is a bad deal to pay late or not at all? 
The Australian Superannuation Guarantee system is designed to penalise severely employers who pay superannuation contributions late or who don’t pay the contributions.  This is because the employer must pay, at least, the Superannuation Guarantee Charge (“SGC”).  For a quarter the penalty would be at least:

  1. The late superannuation contributions; plus
  2. Extra contributions due to a higher earnings base being used; plus
  3. 10% interest calculated from the beginning of the quarter to the time of lodgement of the Superannuation Guarantee Statement or assessment; plus
  4. A $20 charge per employee.
 
In addition to the SGC, penalties can be levied if you have not lodged with the ATO a Superannuation Guarantee Statement.  These penalties can be up to 200% of the SGC. 

Both the SGC and the penalties are not tax deductible. In other words, you are unable to claim a tax deduction in your 30 June tax return for any late paid superannuation contributions made through the year.  It will often be the case that the combined after-tax amount of the SGC and penalties is many multiples of the superannuation contributions paid late.

EXAMPLE:
During one quarter of a year, you have 10 employees. Your total wages are  $150,000 of which $100,000 is subject to superannuation, so you owe $9,500 in super as well as the balance of $50,000 for overtime (which does not attract superannuation). The following is the result of late payment of your superannuation:

1.) Shortfall amount of $9,500 (this is the original superannuation you didn't pay or paid late)
2.) Extra contribution for the overtime - late payment means this is now subject to superannuation ($50,000 x 9.50%) $4,750
3.) Interest - A minimum of $1,425 (this assumes that the SGC Form is lodged 1 year late) 
4.) Administration Charge (10 employees x $20) = $200
***Therefore, you have now increased the original amount owing $9,500 to $15,875 (an avoidable increase of $6,375).
5.) Assuming the ATO contacted you about and applied the Part 7 penalty, this additional amount would then be $28,500 ($9,500 + $4,750 multiplied by 2)

The total is now $44,375

How do the items above affect your tax? Items 1, 2, 4 and 5 are not tax deductible, so this means you pay an extra $2,850-$13,312 in tax depending on your tax rate (assumes a 30% tax rate).

Should you have any queries in relation to the above information please don’t hesitate to contact our office on 9367 4199 or at [email protected].

    Author

    Helpful articles written by our knowledgeable and experienced team.

    Archives

    June 2025
    May 2025
    April 2025
    March 2025
    February 2025
    December 2024
    November 2024
    September 2024
    August 2024
    May 2024
    April 2024
    March 2024
    February 2024
    January 2024
    December 2023
    November 2023
    October 2023
    September 2023
    August 2023
    July 2023
    May 2023
    April 2023
    February 2023
    January 2023
    December 2022
    November 2022
    September 2022
    August 2022
    July 2022
    April 2022
    March 2022
    February 2022
    November 2021
    April 2021
    November 2020
    June 2020

    Categories

    All

    RSS Feed

Need an appointment?

Looking for help with your business? Need more time to focus on what matters to you? Need advice on growing your business? Preston Corporate provides a wide range of services designed to give you the freedom and the growth you seek.
    Please select from the drop-down menu
Submit
Picture

Home

About

Services

Contact

Blog

Privacy Policy

Fees & services

Copyright © 2022
Located on the Ground Floor, Suite 1, 8 Preston Street, Como WA 6152
Liability limited by a scheme approved under Professional Standards Legislation
  • Home
  • Services
    • Accounting
    • Bookkeeping
    • Business Coaching
    • Business Improvement Services >
      • Face to Face Workshops
      • Virtual CFO
    • Corporate Admin
    • Superannuation
    • Taxation
    • Training - Xero
  • About
    • Our team
  • Contact
  • Tax Checklists
  • Blog