ATO super crackdown

Since 2017, the ATO has been collecting employee payslips to manage to national tax gap. The most recent National ATO Audit Report concluded that many employers haven’t been paying superannuation to their employees on time or at all.

Because of reports of large amounts of unpaid Super Guarantee (SG) in the Australian economy and new ATO data matching tools, we are seeing a heightened focus on SG audit activity. The government is focusing on recovering unpaid SG.

What has changed?

  • The ATO is better placed to electronically track your SG compliance. They match data received from employee’s superfunds and payroll lodgements. This means the ATO can track your SG payments and therefore your SG compliance.
  • The ATO has dramatically increased this issue of penalties for non-compliance that come with the financial consequence.

What is your SG Obligation

SG is the minimum super obligation you pay into your employees selected superannuation account each quarter. SG is calculated on your employees Ordinary Times Earnings (normal contract hours) at a current rate of 11% (due to increase to 11.5% July 1 2024)

Super for the quarter is payable to the employee by the due date, this means it is the due date the funds need to land in the employees super fund. Even with the help of technology, this can take up to 15 working days.

What you need to know

If you fail to meet to minimum SG obligations by the due date, a Superannuation Guarantee Charge (SGC) is payable. The SGC includes;

  • The super you would have otherwise have paid
  • PLUS additional amounts including interest on underpayments
  • PLUS administration penalty
  • PLUS culpability penalty (Part 7 penalty).
  • In addition, if you can receive a tax deduction for SG, you do not get a tax deduction for SGC where you would have if SG paid on time.

SGC should be avoided at all costs, not only due to the cost but it is administratively complex.

The ATO will begin SG matching compliance checks and issuing a SG Charges to employers who have been late in paying super or who are not paying superannuation at all.

Need help? Domestic Payroll can assist with our SCG Rescue Pack.