Superannuation is money that employers pay qualified workers to give for their retirement. Now the question arises, what happens if you are an employer and you forget to pay an employee’s super guarantee on time? Let’s dive right in to know what if super payments are missed.
Overview of Super for Employers
If you forget to pay an employee’s super guarantee on time or to the right super fund, you must:
- file a superannuation guarantee charge (SGC) statement
- pay the super guarantee charge.
If an employee notices that their SG obligations have not been met, they can contact ATO and make an employee notification. After that, the ATO will check all notifications and will pursue outstanding amounts where they identify a discrepancy. Your employee’s super contribution will be considered paid on the date when it is received by the super fund. Generally, taxation accountants know about these types of payments, so you can seek help from them.
Payments made to a clearing house that is not processed or reaches the super fund after the payment due date are regarded as late payments if you are utilising a clearing house. The length of processing varies amongst clearinghouses. To guarantee that your payments will be processed prior to the payment due dates, you must review the processing timelines required by your clearing house.
Late Payment Options
You might be able to use a super guarantee payment you made to a super fund for an employee to:
- Put the amount towards future super payments (limited to a maximum of 12 months from the start of the quarter)
- Offset the shortfall and nominal interest components of the superannuation guarantee charge (SGC)
- Pay super in the current quarter.
1. Offset superannuation guarantee charge with late super payments
You can offset missed payments against the SGC if you have:
- paid to your employee’s super fund
- paid before the date your original superannuation guarantee charge evaluation was made
- lodgment of missed payments offset election in the SGC statement via online services for business within 4 years of your original assessment date of SGC
- advised the ATO of the date of a missed payment to your employee’s super fund.
Offset missed super payments against the SGC:
- are not considered tax-deductible
- can’t be utilised as a contribution for the existing quarter or super contributions of future quarter.
For quarters starting on or after January 1, 2020, a salary-sacrificed contribution can’t be offset against the SGC.
2. How to file a missed payment offset election
To file a missed payment offset election, you can use the SGC statement. File via online services for business:
- attach the Excel spreadsheet of the SGC statement to a new secure mail message
- choose Superannuation as the topic
- choose Lodge SGC statement as the subject.
To advise of missed payments:
- Attach proof of the missed payments in a separate secure mail message
- choose Superannuation as the topic
- choose Other as the subject.
3. Carry forward missed SG payments
You can carry forward a missed SG payment if:
- it is for the same worker
- the beginning of the carried forward quarter is within 12 months after the date of the payment.
If you carry forward a missed SG payment, it is only tax-deductible in the year it is received by the super fund.
Super Guarantee Compliance Approach
The ATO’s SG compliance approach supports employers that engage with the ATO. The ATO contacts an employer by email, phone, or letter:
- if they get an employee notification
- if they identify that employers haven’t paid their SG on time
- if they identify that employers haven’t paid the right SG amount for one or more of their employees
- notifying them regarding the need to lodge an SGC statement.
If an employer gets a contact letter and believes they have made payment in full and one time to the right super fund:
- they must review their records to make sure they’ve met their obligations in full
- they don’t need to contact the ATO.
Difficulty Paying SG
If you face difficulty meeting your SG obligations, you are required to make a voluntary disclosure by filing an SGC statement by its due date, even if you are not able to pay it in full. The ATO can’t provide you extension date to file SGC statements after the due date. Until the SGC statement’s lodgment date, nominal interest will be calculated.
Not Willing to Meet Obligations
The ATO will impose penalties on you if you don’t:
- reply to their correspondence
- resolve your outstanding SG obligations.
The ATO will also issue:
- an estimate of SGC liability
- a garnishee notice
- a director penalty notice
- Help you to pay SGC
- an education direction to complete the SG guarantee employer obligations course.
The blog outlines the results of not paying super payments on time and to the right super funds along with late payment options. Moreover, if you face this situation or want to get rid of this situation, then you can get in touch with Reliable Melbourne Accountants.