Now is a great time to check that your current payroll system is meeting your business needs.
Consider this your reminder that the changes to the Superannuation Guarantee (SG) are now in effect. As an employer, your SG payments are due by 28 October, at the new rate of 11%.
We are swiftly approaching the end of the first quarter in the new financial year. As an employer, now is the time for you to shift focus to lodgement dates for key taxes and payroll liabilities. One of the most important of these is our Superannuation Guarantee (SG) payment.
To meet your employer obligations, it is important to check that you are across your superannuation requirements, as well as any existing liabilities you need to fulfill. Whilst some employers may elect to pay superannuation for their employees when they pay their wages (whether that be weekly, fortnightly, etc.), superannuation is only due four times per year. These four dates are the ones the Australian Tax Office (ATO) will use to determine if you have paid the appropriate amount of superannuation for your employees, and whether it has been paid on time.
What is the superannuation guarantee?
Before we get into the nitty-gritty, let’s have a quick recap of what the Superannuation Guarantee is.
The Superannuation Guarantee is the compulsory amount of superannuation an employer must pay to their employee superannuation funds.
This payment is calculated as a percentage of your employee’s ordinary earnings.
Recent changes to the Superannuation Guarantee
A lot has happened this year, so no one (except the ATO) would blame you if the recent changes to the SG rate from the 2023-24 Federal Budget has slipped your mind. As of 1 July 2023, the SG rate increased by 0.5% to its current rate of 11%. This means any wages paid since 1 July will have superannuation calculated at the rate of 11%.
Please note that this does include wages that were accrued before 1 July, but not paid until after 1 July.
When are superannuation payments due?
All SG liabilities must be paid by day 28 of the month directly following the end of each quarter. To add some clarity, here is a list of the due dates for the 2023-2024 financial year:
- Q1 - 28 October 2023 (For SG Liabilities from 1 July 2023 – 30 September 2023)
- Q2 - 28 January 2024 (For SG Liabilities from 1 October 2023 to 31 December 2023)
- Q3 - 28 April 2024 (For SG Liabilities from 1 January 2024 – 31 March 2024) and
- Q4 - 28 July 2024 (For SG Liabilities from 1 April 2024 to 30 June 2024)
Any superannuation payments made after the due date may incur ATO penalties. As such, it is crucial for employers to know these dates and ensure SG payments are made on time.
What are the penalties for late or missing superannuation payments?
The ATO may level a Superannuation Guarantee Charge (SGC) at employers who fail to make SG payments on time. The SGC can also include admin fees, late penalties, and interest on overdue amounts.
It’s important to remember that if you pay late, the ATO will consider the superannuation to be ‘unpaid’ until you have informed them that it has been paid.
Imagine you have a superannuation payment that is due by the 28th of October, but you are busy with other things, and you forget to pay it on time. You finally remember and pay it on the 4th of November, thinking that it's only a minor delay of seven days.
But what if you don't report this late payment to the ATO by filling out an SG form? And what if the ATO finds out about it two years later, when they audit your business? (They can do that for up to four years.) Do you think they will only charge you interest and penalties for seven days of late payment? Think again.
The ATO will charge you for 730 days of late payment! That's right, two whole years of interest and penalties, plus the original amount of superannuation that you owed. And to make matters worse, the superannuation guarantee charge is not tax deductible, so you can't even claim it as an expense. How does that sound for a costly mistake?
Stay on top of superannuation obligations by using the right payroll system
Paying the correct amount of superannuation by the correct due date is one of the most pressing employer obligations to meet on a quarterly basis. The ATO is now receiving payroll information regularly, which means their ability to data match is increasing. Having an appropriate payroll system in place can help you avoid the considerable time and stress involved in manually keeping on top of superannuation obligations. many payroll systems will automatically update your superannuation contributions to the correct rate and even offer an ‘automatic superannuation’ payment functionality.
Now is a great opportunity to review your current system to ensure it is meeting your business needs.
FOR MORE INFORMATION
For further advice on superannuation payments, payroll systems and keeping on top of your business obligations, please get in touch with your local RSM office.