Following the end of the legislated Superannuation Amnesty Period which ran to 7 September 2020, the ATO released a draft Practice Statement (PS LA 2020/D1) to provide guidance to ATO staff in relation to Part 7 penalties on late Superannuation Guarantee Charge (SGC) Payments. It notes that where SGC is paid late (i.e. after the 28th day of the month following the end of the quarter) there will be a minimum penalty of 100% of the SGC amount and a maximum of 200%. The ATO staff will not have discretion to reduce the penalty below 100% where the employer hasn’t voluntarily come forward to lodge an SG Statement prior to any ATO compliance action.
Therefore, we urge you to check your records each quarter to ensure that all mandatory 9.5% superannuation contributions have been paid by the 28th day after the quarter end. For the September 2020 quarter, this is 28 October 2020. If any superannuation is underpaid or paid late (even if it is only one day late) you are required to lodge an SGC statement advising the ATO of the amount that wasn’t paid on time and interest and admin charges are payable on lodgement of the form together with the unpaid superannuation guarantee amount. If you don’t lodge this SG Statement prior to the ATO finding the under payment or late payment (through Single Touch Payroll, an audit or perhaps a complaint from an employee), as explained above, a minimum of 100% of the SGC amount will be applied as a penalty and there is no discretion to have this remitted or revised down. This effectively doubles the amount you will be required to pay and none of it will be tax deductible.
This includes payments of superannuation paid directly to your Self-Managed Superannuation Fund. If you usually pay your contributions in one lump sum towards the end of the financial year, but have declared wages on your Activity Statements throughout the year, you won’t have paid the correct superannuation guarantee by the 28th day following each quarter throughout the year as required.
If you are aware of any superannuation contributions from past quarters that haven’t been paid on time, we would encourage you to lodge an SGC form. We can organise this for you or alternatively, follow this link to the ATO website which explains the steps to take to lodge the form. https://www.ato.gov.au/forms/superannuation-guarantee-charge-statement---quarterly-form-and-instructions/.
If you’re unsure as to what salary and wage payments are considered part of ordinary times earnings for superannuation guarantee purposes, you might find these tables on the ATO website useful. https://www.ato.gov.au/Business/Super-for-employers/How-much-to-pay/Checklist--salary-or-wages-and-ordinary-time-earnings/
For More Information
Please don’t hesitate to contact our Archer Gowland Redshaw adviser if you have any queries in relation to Superannuation Guarantee payments.