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Paying your employees’ super on time and to the correct super fund is an important quarterly task, but when things get hectic it’s easy to miss the due date.
If this happens, it’s essential not to leave it to sort out another day.
Not paying on time or making contributions to the wrong super fund means you are required to pay the Super Guarantee Charge (SGC), and every day you delay will only add to your interest bill.
What are the SGC and SGC Statement?
If you don’t pay the necessary Super Guarantee (SG) contributions for your employees by the quarterly due dates – or don’t pay the full amount – you are required to pay the SG Charge (SGC). Similarly, if you don’t correctly follow your choice of fund obligations, you are liable for the SGC.
When you are required to pay the SGC, you must also lodge an SGC Statement with the ATO. And to top it off, you are not eligible to claim a tax deduction for your SG contributions against your business income.
The SGC has three components:
- SG shortfall amount (including any choice liability)
- Interest on the SG shortfall amount, which accrues from the start of the relevant quarter.
- Administration fee of $20 per employee, per quarter.
To report and rectify missing or underpaid SG payments, or SG payments made contrary to your choice obligations, you are required to lodge your SGC Statement by the SG Charge and Statement due date (see below) and pay your outstanding SGC amount. Unlike usual SG contributions, the SGC is not tax-deductible.
Even if you pay only a few days or weeks late, you still need to lodge an SGC Statement and pay the balance of the SGC.
What is the SG shortfall (excluding choice liability)?
The SG shortfall is the super calculated on your employee’s full salary and wages for the period, not the Ordinary Time Earnings (OTE) amount used in the standard calculation of SG. This means that your SG shortfall will be higher than the SG contribution for the quarter if your employee received overtime or other benefits that are salary and wages but not part of OTE during the period.
If you paid some but not all the SG on time, the SG shortfall will be proportionally reduced to reflect the amount that was paid on time.
What is the choice liability?
If you don’t correctly apply choice of fund or stapling rules, you will incur a choice liability.
A choice liability is part of the SGC and you will be accountable if:
- You haven’t provided your eligible employees with a Standard Choice Form within the required timeframe
- You paid super contributions into a complying super fund that is not the fund chosen by an employee
- The employee commenced on or after 1 November 2021, did not make a choice, and you did not request stapled fund details or did not contribute to the stapled fund you were notified of
- You charged employees a fee for implementing their choice of fund.
Contributions made under these circumstances are called ‘no choice contributions’
The choice liability is 25% of what the SG shortfall would have been if the no choice contributions were not made, less any individual SG shortfall for the employee for that quarter (if contributions were underpaid as well as paid under ‘no choice’ conditions). This is limited to $500 per notice period for each employee.
Due dates for SG Charge and SGC Statement
When you make SG contributions on behalf of your employees, your payment must be made in full by the quarterly due date, which is 28 days after the end of each financial quarter.
If you don’t meet this payment deadline or you have a choice liability, you are required to lodge an SGC Statement and pay the SGC by the due date in the following calendar month.
|SG contribution due date
|SG statement and charge due date
|1 July – 30 September
|1 October – 31 December
|1 January – 31 March
|1 April – 30 June
If you know you will be unable to lodge your SGC Statement or pay the SGC by the due date, you can apply to the ATO for extra time.
Applications to the ATO for an extension must be either in writing stating why you need the extension, or by phone (13 10 20). The application must be received by the ATO before the SGC due date.
The general interest charge (GIC) will apply from your deferred payment request until the day you pay the SGC in full.
In early 2022, the ATO announced it was taking a stricter approach in relation to unpaid tax debts as the COVID-19 pandemic situation eased. One of its priority debt collection areas is unpaid SGC debts.
Failing to engage with the ATO about an unpaid SGC debt is likely to see the regulator take stronger action and you could face additional penalties.
Calculating the SGC
When you complete an SGC Statement, you are required to work out your own SGC.
Working out your SGC can be a little tricky, so the ATO provides some useful tools to help employers with their calculations. These include the ATO’s electronic SGC Statement Calculator Tool and an Excel spreadsheet version of the calculator. The spreadsheet version does not automatically calculate your SG shortfall amount, but it does calculate the nominal interest component up to the date the form is completed.
Completing and lodging your SGC Statement
There are three ways to lodge your SGC Statement:
1. Use the SGC calculator in the ATO’s Online Services for Business web tool. This tool asks a series of questions to help work out if you need to pay the SGC for your employees and how much you need to pay. At the end, the calculator electronically lodges your SGC statement.
2. Complete the SGC Statement Excel spreadsheet and lodge it using the ATO’s Online Services for Business web tool. The spreadsheet includes detailed information on how to calculate your SGC liability.
3. Use the SGC Statement and calculator tool to generate a PDF of your SGC Statement and mail it to the ATO. The ATO does not recommend this option due to the high chance of mistakes and the time taken to process your statement. However, you can use the output from the tool to help you complete the excel spreadsheet from option 2.
The ATO has detailed information available online to help you work through the SGC calculation and lodgement process.
What if I make a late SG payment?
If you make catch-up SG payments to your employees’ super funds after the quarterly due date, you are still required to lodge an SGC Statement and to pay the SGC.
When you make a late super payment to an employee’s super fund, you may be able to:
- Apply the late payment offset to reduce the shortfall amount and nominal interest component of the SGC
- Put the payment towards your future super obligations (up to a period of 12 months from the beginning of the quarter).
Option 1 – Late payment offset
Generally, you can offset a late payment amount for one of your employees against your SGC liability for the employee for the quarter if you have:
- Made the late payment to your employee’s super fund
- Made the late payment before an SGC assessment is raised
- Made an election in the approved form requesting the contribution to be offset
- Lodged a late payment offset election through the ATO’s Online Services for Business tool within four years of your original SGC assessment date
- Advised the ATO of the date of the late payment to your employee’s super fund.
Option 2 – Carry forward your late payment
Alternatively, you can choose to carry forward a late super payment if it is for the same employee and the start of the carry forward quarter is within 12 months of your payment date.
Carry forward late super payments can be used to:
- Offset the SGC
- Count towards your SG obligation in the quarter the payment is made
- Help pay your future SG quarterly obligations.
Carry forward payments are only tax deductible in the year they are received by your employee’s super fund.
Source: Adapted from the ATO website