Paying Superannuation late, contributions that are delayed in respect to the salary and wages for a quarter must be paid by 28 days after the end of the quarter. Whenever this is not done, even if superannuation contributions were made one day late, the employer must lodge a “superannuation guarantee statement” with the Australian Tax Office (ATO) one month after the superannuation payment was due.
Employers Who Are Paying Superannuation Late Can Receive Penalties Of Up To 200 Percent
It is important be aware that whenever an employer fails to submit a superannuation guarantee statement when it is 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 percent) the original amount of the Superannuation Guarantee Charge.
The penalty of anywhere up to 200 percent 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.
The Australian Tax Office (ATO) also has the authority to remit the penalty. However, the ATO has a policy of not remitting the penalty below 100 percent 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 potential situation 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.
On the other hand, the employer might 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 type of situation, the ATO might charge a penalty equal to 150 percent of the superannuation guarantee charge, plus interest and administration charge as well as being denied a deduction for the superannuation contributions.
Whenever a superannuation contribution is paid late but before lodgement of a superannuation guarantee statement or assessment by the ATO of superannuation guarantee charge, the employer may decide 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 sake of calculating the penalty additional superannuation charge. Whenever this type of election is made, the superannuation contributions set off against the superannuation guarantee charge will also be non-deductible.
One in Seven Australian Employees To Pay For Higher Superannuation With Reduced Wages
More than one in seven employees across Australia have been informed that their extra superannuation payments will be deducted from their wages.
This worrying figure, which occurs weeks after the superannuation guarantee (SG) increased from 9.5 to 10 percent of wages, has led to lawyers reminding Australians that most workers are legally allowed to receive an increase in super without a cut in their take-home pay.
Recently published research found that average-income workers will see their overall income rise by $233 a year if their boss pays them the super increase. However, if their take-home pay is reduced to fund the new super increase then they could potentially lose that amount each year.
The 13 percent of Australian workers who will have to take a pay cut is probably just the tip of the iceberg. According to a survey of 838 respondents. More than four in ten employees (43 percent) have admitted that they did not know whether their employer would cut their wages to make up for the higher SG.
There appears to be a lack of understanding among employees about this superannuation related issue. Around four in 10 employees admitted that they were either unaware of the SG changes being introduced on 1st July 2021 or they knew there were aware of the changes coming but they didn’t know what the changes were about.
This illustrates that there is a huge gap in knowledge, particularly among younger employees, with 30 percent of those under the age of 40 saying that they were completely unaware of the changes. Reminder the ATO advises that employers is paying superannuation late they will be heavy penalized.