Superannuation Guarantee Zero Tolerance

In the last couple of months, we have observed an increase in Australian Taxation Office (ATO) reviews and audits focused on Superannuation Guarantee (SG).

Broadly, with respect to the SG audits, a key driver appears to be data-integrity checks comparing data within Single Touch Payroll (STP) reporting, financial statements, income tax returns, activity statements and even employee PAYG credits claimed through personal income tax returns.

Most employers do the right thing and pay their SG contributions on time. Overall, the ATO estimates that employers are paying more than 94% of the SG they are required to pay without intervention from the ATO. But that means that the gap of around $3.4bn (or 4.9% of contributions) is not paid and is a large amount of money. The ATO are very aware that this gap is money that belongs to other people.

Employers must pay their SG contributions quarterly but can pay more frequently if they choose to. Over 40% of employers pay more frequently.

Where an employer does not meet the minimum requirement by the due date, they must lodge an SG Charge (SGC) statement and pay the SGC to the ATO. The ATO will then distribute the shortfall and interest amounts to the employee’s super fund. You cannot just make up the payments to a super fund.

Whether you pay your SG contributions weekly, monthly, or quarterly, it’s important that you check that the SG paid takes into account the new SG changes that started on 1 July 2022.

These were:

  • Increase in the SG rate from 10% to 10.5% (currently 11%).
  • Removal of the $450 per month eligibility threshold when paying SG.

 
If you don’t pay an employee’s SG amount in full, on time and to the right fund, you must pay the SGC. You must also lodge an 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.

SGC payment and lodgment dates

The due date for payment of the SGC and lodging the statement is one calendar month after the SG due date.

Quarter SG payment due date SGC and statement due date
1 July – 30 September 28 October 28 November
1 October – 31 December 28 January 28 February
1 January – 31 March 28 April 28 May
1 April – 30 June 28 July 28 August

 
If a due date falls on a weekend or public holiday, you can make the payment and lodge the SGC statement on the next business day.

Working out the SGC

The SGC includes:

  1. the SG shortfall, made up of
    1. SG calculated on salary and wages (including any overtime)
    2. any choice liability, based on the shortfall and capped at $500
  1. nominal interest of 10% per annum (accrues from the start of the relevant quarter)
  2. an administration fee of $20 per employee, per quarter.

In short, the key takeaway for employers should be that the ATO has increased its proactivity in identifying non-compliance and, for audits in particular, a key lever is data matching to STP. It is, therefore, more important than ever that organisations ensure that compliance and governance processes are up to date, and that their historical robustness and application can be demonstrated.

To discuss your SG contribution requirements, contact the team at Lockwood Partners.