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As an employer, you have an obligation to contribute superannuation on behalf of your employees, but do you know that penalties are imposed if ever you fail to make contributions?
If the penalties for non-compliance are any guide, super guarantee payments are the obligation employers should prioritise above all others.
If you’re an employer, you’re required to pay 10% of your employees’ ordinary time earnings into their chosen superannuation fund.
These contributions must be paid by the quarterly cut-off date.
If you fail to do this, you have to:
“If you’ve got tax debts,” says Roy Sanderson, “the one you should pay first is the super guarantee charge.
“That because, unlike other tax debts, you can’t defer it or pay it back in interest-free instalments as part of a payment plan.”
Not only do you have extra paperwork and penalties to contend with, you also end up paying more in tax.
That’s because, unlike super guarantee contributions, payment of a super guarantee shortfall is not tax-deductible.
The downsides don’t end there: If you’re a director of a company that doesn’t meet its super guarantee charge obligations, the ATO can recover those amounts from you personally.
“The ATO is extremely serious about employers meeting their super guarantee requirements,” says Roy.
“It’s vital employers offer their employees a choice of super fund, pay them the right amount of super, and pay it on time.”
As for the payment method, Roy says all businesses should be SuperStream compliant –able to send the super contributions and data electronically to their employees’ funds.
These transfers are often done via a super clearing house, which can distribute the contributions in bulk on your behalf.
Is your business struggling to meet its super guarantee obligations?
RJS can help you:
Invite us along on your financial journey, you’ll be amazed just how far our expert guidance can take you. Contact us at info@rjsanderson.com.au or on 1300 27 28 29.
This article is published by R J Sanderson and Associates Pty Ltd ABN 71 060 299 783. This article contains general information only and is not intended to represent specific personal advice (Accounting, taxation, financial or credit). No individual personal circumstances have been taken into consideration for the preparation of this material. It is recommended that you obtain your own personal professional advice before making any financial or business decision.