SuperStream and more recently Single Touch Payroll (STP) have both been significant changes to the payroll compliance framework for employers.
SuperStream requires that payments of superannuation to employee’s superannuation funds are done electronically. STP requires that employers report their employee’s payroll details electronically to the ATO at each payrun. The various software providers have supplied solutions that work efficiently, and the disruption to most employers has been minimal.
Concern for Employers
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The big issue currently facing employers is that the combined effect of SuperStream and STP gives the ATO unparalleled payroll data matching capability. The ATO now has a fully electronic system for matching employer superannuation payments to employer superannuation liabilities in real time. This is an issue because of the compulsory Superannuation Guarantee (SG) requirements for employers.
SG is the 10.5% calculated on an employee’s ordinary times earnings (OTE) that all employers must pay to their employee’s superannuation fund or retirement savings account (RSA).
SG payments must be paid to the employees complying superannuation fund or RSA by the quarterly due dates (28 days after the end of each quarter). Contributions are only considered paid when the superannuation fund receives the payment. Banking or superannuation clearing house delays outside the control of employers can mean that some payments are not made on time.
SG payments not received by the employee’s superannuation fund by the relevant quarterly due date will be considered an SG shortfall amount, and incur the following automatic penalties:
- A Superannuation Guarantee Charge (SGC) statement must be lodged with the ATO detailing the SG shortfall amounts
- A 10% interest charge on the SG shortfall amount- not tax deductible
- A $20 administration fee per employee per quarter- not tax deductible
- SG expanded to include gross salaries and wages
- The final and most significant penalty is that the tax deduction for the SG shortfall amount is also denied.
Other potential penalties include director penalty notices, the general interest charge (GIC) and fines of up to 200% of the total SGC amount.
You Can Run…
We have seen a noticeable increase in the number of SG audits for employers upon the back of SuperStream and STP. There is literally no place to hide for employers and there is little doubt that the ATO will try to automate their audit processes to begin issuing near automatic SGC assessments and penalties.
SGC payment and lodgement dates
The due date for payment of the SGC and lodging the statement is one calendar month after the super guarantee due date.
|Quarter||Super guarantee payment due date||Super guarantee charge 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|
For due dates that fall on a weekend or public holiday, you can make the payment and lodge the SGC statement on the next business day.
- Pay your SG liabilities prior to the due date
Pay your SG before anything else and allow for processing time of seven days. In fact, I now recommend to my clients that they pay their SG liability when they pay their employees’ wages at each payrun. This helps ensure it doesn’t get forgotten until after the quarterly cut-off date and it helps limit the damage if you are late.
- Don’t forget your own SG
If cashflow is tight it can be tempting to delay your own SG payments. DON’T! The ATO will not distinguish between your SG and your employees SG. The penalties will be applied just the same.
- Proposed SG Amnesty
The proposed amnesty will allow a once-off voluntary disclosure by employers for previously undeclared SG shortfalls. The administration and interest penalty will not apply, and shortfall payments in the amnesty period will be tax deductible.
It looks increasingly likely that the proposed amnesty legislation will be enacted into law. It does have its limitations, but you may have the once off opportunity to come clean and pay your SG shortfall amounts without attracting
penalties. Find out if you have any qualifying shortfall amounts and get ready to move quickly once the amnesty becomes law, so that the amnesty period doesn’t lapse.
Where to Next? Having trouble with superannuation or payroll?
Perhaps you are daunted by the thought of reconciling your superannuation liabilities?
At RSM, we can help you through the whole process. Get in touch with your nearest office today >>