You probably already know that directors of companies are held personally liable for any unpaid superannuation. But did you know that if your superannuation is not paid by the due date, the payment will become non-deductible?
What this means is that the $100,000 quarterly superannuation paid late, will cost you a further $30,000 of income tax, thereby increasing the cost of superannuation from 9.5% to 12.35% - given that people are one of the biggest costs to your business, can you afford for their cost to increase by almost 3%?
Beg, borrow or steal – make sure that you pay your superannuation on time. Don’t steal, but maybe put off paying something else, such as the deposit on the Lamborghini, to ensure that superannuation is paid on time.
By law, employers are required to pay a minimum superannuation contribution of 9.5% of an employee’s ordinary time earnings to each employee who is paid $450 (before tax) or more per calendar month, and is over 18 years of age (or under 18 years of age and working over 30 hours a week). By 2019 this rate may have increased to 12%.
This Superannuation Guarantee applies to full time and part time employees and some casual employees. However, some employees may not be eligible if they are:
- Paid to complete work of a private or domestic nature for 30 hours or less each week
- A non-resident employee and they are paid to do work outside Australia
- A member of the Army, Navy or Air-Force Reserve
- A foreign executive holding a specific class of visa or entry permit
- Temporarily working in Australia for an overseas employer and are covered by a bilateral social security agreement
The Superannuation Guarantee must be paid into each employee’s nominated superannuation fund at least every three months, specifically, by the 28th day following the end of the quarter.
| Quarter | Quarterly Date | Payment Cut-off |
| Quarter 1 | 1 July – 30 September | 28 October |
| Quarter 2 | 1 October – 31 December | 28 January |
| Quarter 3 | 1 January – 31 March | 28 April |
| Quarter 4 | 1 April – 30 June | 28 July |
When a cut‑off date for payment falls on a Saturday, Sunday or public holiday, payment may be made on the next working day after the cut‑off date.
The penalty for not paying superannuation on time is one of the most severe that a business may suffer. Superannuation not paid on time, even by only one day, results in a penalty known as the Superannuation Guarantee Charge – which is equal to the amount of superannuation not paid by the due date, plus interest, plus administrative charges.
Not only do you miss out on a tax deduction and have to pay interest – the ATO also makes you calculate and pay on your employees’ total salary and wages, which includes overtime!
For more information on superannuation payments please visit the ATO’s website