Late payment of super can lead to penalties equal to 200% of the amount of superannuation payable.
Payment by due date and consequences for not paying on time
Superannuation contributions in respect of salary and wages for a quarter must be paid by 28 days after the end of the quarter. Where this is not done, even if superannuation contributions were made one day late, the employer must lodge a “superannuation guarantee statement” with the ATO one month after the superannuation payment was due.
Where an employer fails to provide a superannuation guarantee statement as required, the employer is liable to pay Superannuation Guarantee Charge equal to the superannuation contributions payable plus nominal interest and administration fee. In addition, and by way of penalty, the employer is liable to pay an additional amount equal to double (200%) the amount of the Superannuation Guarantee Charge.
The penalty of up to 200% is calculated as if you had not paid the superannuation even if you have paid the superannuation late.
The superannuation contributions and penalties will also be non-deductible.
Tax Office approach for remitting the penalty
The ATO has the power to remit the penalty. However, the ATO has a policy of not remitting the penalty below 100% of the superannuation guarantee charge payable where an employer did not come forward voluntarily and it took ATO compliance action for them to disclose.
One possible scenario is where an employer pays superannuation contributions a couple of weeks late but is unaware of the obligation to lodge a superannuation guarantee statement so does not do so.
If the employer is then audited by the ATO and fully cooperates with the audit,
- they will be required to pay the interest and administration charge plus;
- they are likely to be charged a penalty equal to 100% of the superannuation guarantee charge even though the superannuation contributions were made in full; and
- they will be denied a deduction for the superannuation contributions.
Alternatively, the employer may be reminded by the ATO of their obligation to lodge a superannuation guarantee statement but overlook this reminder on the basis that they know that they have paid the relevant superannuation and do not understand their other compliance obligations. In this case, the ATO may charge a penalty equal to 150% of the superannuation guarantee charge, plus interest and administration charge as well as being denied a deduction for the superannuation contributions.
When the superannuation contributions are paid late but before lodgment of a superannuation guarantee statement or assessment by the ATO of superannuation guarantee charge, the employer may elect to set-off the superannuation contributions against the superannuation guarantee charge but the set-off does not take effect for the purposes of calculating interest until a written election is made and the set-off is disregarded for the purposes of calculating the penalty additional superannuation charge. Where such an election is made, the superannuation contributions set off against the superannuation guarantee charge will also be non-deductible.
We can help
Nexia Australia can help you comply with all of your Superannuation Guarantee compliance obligations. Where Superannuation Guarantee charge has not been paid on time we can advise you on what action to take to minimise your penalty exposure, including assisting you with applying to the ATO to remit the penalty.
