It has been a very tough couple of years for many Australian businesses.
A recent study into the mental health of small business owners found 1 in 3 reported a medical diagnosis of either stress, anxiety, or depression in the past 12 months.
Interestingly, the study also found a notable link between stress and employee numbers. As a business employs more staff, the business owner’s stress level increases.
It’s reasonable to suspect that one aspect of this stems from the amplified financial pressure of managing more employees. In addition to Pay As You Go withholding, managing superannuation payments in times of financial pressure can become overwhelming.
However, there are very real reasons for keeping up to date with these payments – a fact that some small business owners are dealing with now that it appears ATO amnesty has come to an end.
The “Superannuation Guarantee Charge” is a penalty applied to a business that does not pay the minimum amount of super guarantee for their eligible employees to the correct fund by the due date. The due date is currently the 28th day of the month following the previous quarter.
In addition to administration fees, the interest penalty for overdue payments is a steep 10%. Even if the superannuation funds are paid just a little after the due date, not paying the superannuation charge for late payment will see it accrue.
Let’s say a small business runs into financial trouble, and is 7 days late in paying its superannuation guarantee of $30,000. If they do not then pay the superannuation guarantee when it’s due, the penalty will continue to build. After 5 years, the small business could owe in excess of $150,000 in penalties alone!
This is a stress no business owner needs in these difficult times. To avoid penalties, always lodge by the due date – and if you cannot make the payment on time, notify the ATO. There are ways to avoid or reduce penalties if you are upfront, which will help to reduce stress and keep your business running smoothly.
How RSM can help
We can manage your tax obligations on your behalf, and ensure all required payments are paid as they fall due.
Where there are not enough funds to make a payment, we can help you devise a strategy to overcome financial difficulty by clearly explaining the options available to you.
Our experienced accountants can also act as a mediator between you and the ATO, and may be able to apply for reduced penalties where appropriate.
For further information
To speak with an RSM accountant or business adviser, simply contact your local RSM office.