Avoid ATO penalties by paying superannuation on time
3 September 2018
The correct calculation and timely lodgement of superannuation payments is crucial, not only to uphold your obligations as an employer, but also to ensure you don’t fall foul of the ATO.
Case study – underpayment and late payment of superannuation
We came across a scenario recently where an employee lodged a complaint with the ATO regarding what they believed to be a situation of superannuation underpayment by their employer.
The complaint resulted in an audit of all employee superannuation contributions from the previous three years, and consequently the ATO found that there was a minor shortfall in payments (totalling approx. $1,000 over the 3 year period). Additionally, the employer had also been late in making payments on a few occasions.
These sorts of errors can often be the result of a miscalculation or an administrative oversight in regard to missing deadlines. The penalty that was applied by the ATO however highlights the importance of ensuring the accuracy and timeliness of your payments.
The employer was fined $10,000, which largely comprised of interest due to late payment of the superannuation contributions. In most cases, quarterly super was paid within a month of the due date however as the employer had not reported these late payments to the ATO at the time of paying, interest accrued until lodgement of the Super Guarantee Charge forms. This interest is then passed onto the employees’ super funds to compensate for loss of earnings on their underpaid super.
Here are a few tips to help avoid this situation:
- Know your obligations
If you pay an employee $450 or more before tax in a calendar month, you have to pay super of 9.5% of their ordinary time earnings.
If you hire contractors, they may be considered employees for superannuation guarantee purposes – use the ATOs superannuation guarantee eligibility decision tool to work out if they’re entitled.
- Pay quarterly superannuation on time
Q1 (1 July – 30 September) – due by 28 October
Q2 (1 October – 31 December) – due by 28 January
Q3 (1 January – 31 March) – due by 28 April
Q4 (1 April – 30 June) due by 28 July
Remember, if you don’t pay on time, you have to pay the super guarantee charge.
- Contact the friendly team at Shakespeare on 9321 2111 if you would like some personalised advise in relation to superannuation compliance and your business.
General disclaimer: Our firm provides the information on this website for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles on this website are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose