As mentioned in previous editions of Armada Insights, the ATO has ramped up its debt collection activities by issuing Director Penalty Notices for outstanding debts. These debts include GST, PAYG and Superannuation.
The number of directors receiving penalty letters for unpaid superannuation are now increasing. The ATO indicated unpaid super was one of their priority debt collection areas.
Unpaid Superannuation is a serious matter. Super must be paid into employees superfunds at least once per quarter. Quarterly superannuation payments are due to be paid on the 28th of January, April, July and October. However due to the mandatory use of super stream mediums, businesses are not allowing for time delays in super stream processing. We recommend 1 week in advance of the due date.
If you fail to pay your employees superannuation by the due date, you are then liable to pay the Super Guarantee Charge (SGC) and lodge a SGC statement to the ATO. The SGC is more than the super you would have otherwise paid to the employee’s fund and is not tax deductible.
The superannuation guarantee charge is generally made up of:
- Super calculated on salary and wages (this is a rule of thumb, but is much more complex).
- *Nominal interest of 10% per annum (accrues from the start of the relevant quarter).
- An administration fee of $20 per employee, per quarter.
Failing to engage with the ATO about an unpaid SGC debt is likely to result in stronger action and additional penalties.
The ATO uses data-matching technology to identify unpaid superannuation and they actively encourage employees to report businesses who do not pay super. There is no hiding from paying your employees super, so if you do receive a Director Penalty Notice regarding unpaid super, please contact your advisor ASAP.