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It's critical that your super contributions are received by a clients superannuation fund by their due date! If you're using a commercial clearing house ensure your payments are 10 days before the actual due date.
With many bookkeepers handling superannuation for their clients, be aware that the ATO just has recently made employers liable for late payments of superannuation guarantee to their employees, even though the payments were made to a commercial clearing house on or before the due date. As the later example illustrates, this can have a potentially catastrophic impact on client.
As you know, superannuation guarantee must be paid to employees quarterly by the following due dates:
To be clear, even if an employer is just one day late, the ATO has no discretion to let them off. The amounts must be received by the superannuation fund on or before the due date (as distinct from the date the payment is made). Therefore, employers should make payments a few days earlier to ensure that they are processed by the 28th.
Where an employer has not paid the required amount of superannuation by the quarterly cut-off date, they must raise an assessment by lodging an SG Charge Statement and pay the SG Charge to the ATO by the 28th day of the month following the above due dates. To be clear, if an employer has not paid sufficient SG by the quarterly cut-off dates , simply paying the outstanding SG amounts as a late contribution straight to the employee’s superannuation fund after those quarterly cut-off dates and not lodging an SG Charge Statement in the hope that this does not get detected, is not a legal solution. It’s not up to the ATO to detect employers who have not met their superannuation obligations. Under the SG Charge self-assessment model, an employer must raise an assessment themselves (or you on their behalf) by lodging an SG Charge Statement.
If you lodge your SGC statement late, or fail to provide a statement or information when the ATO ask for it during an audit, you are liable for a penalty (Part 7 penalty) which is up to 200% of the SG Charge.
To discharge their SGC liability, many employers choose to use a superannuation clearing house. The ATO offers their own clearing house for employers. Eligible businesses are those with 19 or fewer employees or an annual aggregated turnover of less than $10 million. Most super funds provide access to a clearing house service and will help you set up your account. There are also a number of private super clearing house service providers, such as the big software houses including XERO.
There have been a large number of cases of late where the ATO has been deeming that payments made to a clearing house by the due date are in fact late – because the clearing house itself has not passed on the amounts to an employee’s own superannuation fund by the due date. As a result, employers have been stung for superannuation guarantee charge (SGC). This consists of the unpaid superannuation (including any choice liability calculated on your employee's salary or wages), interest on those amounts (currently 10%), and an administration fee of $20 per employee, per quarter.
The basis for the ATO doing this is that, as stated earlier, the contribution must hit the employee’s super fund (as distinct from the clearing house) by the due date. Some commercial clearing houses can take up to ten days to make the payment to super funds. The exception here is the ATO clearing house. Once your contribution is received by this clearing house, it is deemed to be received by an employee’s superannuation fund.
Employers and their BAS and Tax Agents who have genuinely believed they have paid on time (before 28th of the following month) but subsequently found in an SG audit that it had not been processed on time are subject to Part 7 penalties unknowingly denied the opportunity to lodge SGC statements as super funds do not advise employers of receipt dates.
Take the example of a client with a $100, 000 December quarterly SG liability for 50 employees and pays it on the 26th of the month following the end of the quarter (like they had for the past 10 years) to a commercial clearing house. The SG is not receipted by the fund until the 30th day following end of quarter. The ATO calculator would yield the following estimated outcome as at 29th March 2021:
SG (deemed paid late): $100,000
Administration Charge $1,000
Part 7 penalty $100,000
Total due $205,897 (SG $100,000 plus penalties $105,897) plus loss of tax deduction; a further $27,533 (@26%) plus SGC on any wages in excess of OTE.
Imagine, having acted in good faith and paid the super on time, explaining this to the client
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