Getting it Right – Employee Super

No one likes missing out on a tax deduction…. so did you know paying employee superannuation payments late, means you miss out on the tax deduction (forever)…. despite the fact you still need to pay the required superannuation, plus interest and ATO penalties?

If you’re required to pay super for your employees or workers, you must pay super contributions to their nominated super fund by the following dates:

• Quarter 1 (July, August, and September) – 28 October
• Quarter 2 (October, November and December) – 28 January
• Quarter 3 (January, February and March) – 28 April
• Quarter 4 (April, May and June) – 28 July

Employee superannuation is currently 10% of Ordinary Times Earnings. More information can be found by clicking here.

When a super due date falls on a weekend or public holiday, you can make the payment on the next business day. Importantly, the above rules apply even to your own superannuation payments where you are an employee of your own company/trust.

If you have missed an employee superannuation , or didn’t pay the full amount of your employees’ super guarantee (SG) for a quarter on time, you’ll need to:

• lodge a Super guarantee charge statement to us by 28 February 2022
• pay the SG charge to us.

By law, the ATO are unable to extend the due date to pay SG. The way you calculate the SG charge is also different from how much SG you pay to your employees’ funds. The SG charge is calculated on an employee’s total salary and wages (including overtime and some allowances) and includes interest and an administration fee of $20 per employee, per quarter. The ATO then pass this onto the employees superannuation fund to compensate them for lost earnings, less the administration charge and penalties.

The ATO view late superannuation payments as stealing/theft, so they have very little tolerance for non-compliance. The worst thing you can do is ignore the situation if you are unable to pay employee superannuation on time.

Holmans recommend paying employee superannuation monthly to assist with cashflow management and ensure any possible late payments are reduced. We also recommend you diarise it in your calendar for the 20th of each month.

Disclaimer: This article contains general information only. Regrettably, no responsibility can be accepted for errors, omissions or possible misleading statements or for any action taken as a result of any material in this guide. It is not designed to be a substitute for professional advice, as such a brief guide cannot hope to cover all circumstances and conditions applying to the law as it relates to these items.