The Super Guarantee Charge (SGC) is a mechanism as part of our Superannuation system which ensures employers make the required superannuation contributions on behalf of their eligible employees.

Employers are required to pay the SGC in the event they do not pay the full amount of Superannuation to the correct fund by the designated due date.

Here’s how the Super Guarantee Charge is calculated:

If an employer fails to make the required superannuation contributions for eligible employees by the quarterly due dates, they may be liable for the Super Guarantee Charge. The charge includes the following components:

1) A. Superannuation Guarantee Shortfall: This is the amount of the superannuation due for the quarter.

B. The Choice Liability: Applies only when an employer did not offer their employee the choice of Superannuation fund or did not act on their choice. The choice liability is based on the Super shortfall and capped at $500 per employee per quarter.

2) Interest: Calculated on the Superannuation Guarantee Shortfall. The interest rate is set by the Australian Taxation Office (ATO) and is designed to compensate for the delay in making the required contributions. At present, the interest rate is 10% per annum and accrues from the start of the relevant quarter.

3) Administration Fee: A $20 flat fee is added to cover the administrative costs of the ATO. This fee is per employee.

It’s important to note that the Super Guarantee Charge is separate from the actual superannuation contributions. Employers are required to report and rectify any shortfalls to the ATO. For employers who fail to make the SGC payment by the due date (which differs from the Superannuation payment due date) you will receive additional penalties.

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Please note, choosing to pay your superannuation obligations late may seem a simple solution to cash flow issues however it results in severe consequences.

Interest continues to accrue daily until the SGC statement is prepared, lodged and the debt crystallised with the ATO on the full balance of the super, even if it was paid 1 day after its due date. Further, the SGC payment is not tax deductible.