The Australian tax law requires compulsory superannuation (SGC) to be in the employee’s accounts by the due date each quarter. I explain what happens if you are late.
Compulsory superannuation started in Australia in 1992 and over 30 years later it is still an obligation that not all employers take seriously. It is often not until an employee starts to chase their employer for unpaid super that the issue is highlighted and I have seen many salary and wage earners turn a blind eye to their unpaid super, either due to fear of approaching their employer, or that they just can’t be bothered.
However, times are changing and the ATO are in a position to be proactive about unpaid super. From my observation, this is going to be a very big issue that small business (and accountants) will be dealing with. The ATO are not waiting for an employer to make a complaint before they take action. With Single Touch Payroll they are quickly aware of missed or late payments. It is time for employers to get serious about their superannuation obligations.
This will become an even bigger issue when we move to Payday Super from 1 July 2026.
Compulsory superannuation must be paid into your staff members superannuation fund (that they have been allowed to choose) on a quarterly basis by the due date. If the payment has not been made by that date a Superannuation guarantee charge statement must be lodged with the ATO and the calculated Superannuation Guarantee charge must be paid to the ATO. Due dates are shown in the table below (taken from the ATO website).
But it is only a late payment???
If the superannuation is paid late, even by 1 day, the superannuation is no longer a tax deduction.
If the superannuation is paid late, even by 1 day, the superannuation guarantee charge statement must be lodged and the superannuation guarantee charge must be paid. This includes a penalty of $20 per employee and 10% nominal interest.
If the superannuation is paid late, the basis of the superannuation guarantee shortfall moves from Ordinary Times Earnings to Salary and Wages. This means that overtime is included in the calculation.
And it gets worse! As soon as the superannuation guarantee shortfall is unpaid by the due date the directors of a company become personally liable. The ATO can issue a range of penalties, including a Part 7 penalty, the maximum of which is 200% of the superannuation guarantee charge payable.
We have already seen the ATO approach some of our clients about superannuation that has been paid late without a Superannuation Guarantee Charge Statement being lodged. We then need to go back and prepare that statement and pay the nominal interest charge from the time between the obligation arising and the statement being processed (not the date the super was paid). This may mean 4 years of nominal interest at 10% on a payment that was a few days late.
This is going to become common practice. The ATO will work with employers to educate them about their obligations, but let me assure you that sticking your head in the sand and ignoring your super responsibilities is no longer an option.
What can I do to make sure I comply?
The ATO have released a short online course and I suggest that all business owners take an hour to complete this course. The link is below. The Commissioner of Taxation will be directing certain employers to undertake this course, but there is absolutely no reason you cannot do the course now and be proactive. I did it and I found there were some things I was not aware of either (and I work with this day in day out).
Next, do an audit of your business’s superannuation. Is it being calculated correctly? Is it applying to all of your employees? Have you given all employees a choice of superannuation fund? Are there any contractors who you should also be paying superannuation for? It is surprising how often there are mistakes that have gone unnoticed.
Have you been late in paying your superannuation in the past? If so, it is a pretty big chance you did not lodge a Superannuation Guarantee Charge Statement and you probably should talk to your accountant about fixing this up now before the ATO chase you.
Make a BIG note in your diary to update your payroll system on 1 July 2025. Superannuation goes up to 12% from that date.
Make sure you are paying your super on time. Most payroll systems now have the ability for you to push the payments through as often as you like. We are recommending that super payments be made at the same time as payroll so you are always up to date (and it helps with your cashflow as well). You will be needing to do this from 1 July 2026 anyway so why not start now.
While I may sound like a broken record always stressing the importance of paying superannuation on time, I am only doing this for you own good. I have seen the devasting results of superannuation audits. Understanding your obligations and getting it right the first time will save you a mountain of stress and money.
