Hi and welcome to my first blog!!
The end of September does not only bring the beginning of spring but also a conclusion of another quarter. For most business owners this means that new deadlines are coming up.
The one I would like to focus on in this blog is superannuation guarantee (SG). Although lots has been written about this already it would not hurt to recap some facts.
Superannuation has been in force for quite some time, but it appears that there are still employers out there who are unsure about some of the aspects that relate to this obligation. In this blog, I would like to summarise some of the most important ones.
When the obligation arises
Generally, superannuation guarantee (currently at 9.5% of Ordinary Time Earnings - OTI) is compulsory for all those who engage employees in their businesses. All employees (full time, part time or casual) aged over 18 years and earning more than $450 per month are required to be paid their super guarantee at least quarterly into their complying super funds or retirement saving accounts.
Additional condition applies for employees under 18 years (or domestic workers) where they have to work for at least 30 hours per week to qualify.
When an employer hires new employee, a Superannuation choice standard form should be included in paperwork handed to an employee for completion. Please visit "Other links & info" on our website to download a copy.
In this standard form, employee specifies their nominated superannuation fund for future super contributions. In case that no superannuation fund is nominated by an employee or an employee fails to provide their superannuation details on time employer is required to use their "default" super fund for superannuation contribution. Unfortunately excuse such as "I was not provided with the super details and therefore could not pay the contributions" would not suffice.
The Superannuation choice standard form should be retained by an employer for future reference as it states important information on how employer handles superannuation for each employee.
Subcontractors & superannuation
Please be aware that employers may also be required to remit the compulsory superannuation payments for individual workers engaged as sub/contractors (working under their ABN). Some individual sub/contractors are deemed as employees for superannuation purposes, especially where the workers are on "like employee" basis - meaning that they mostly work for one employer, they are provided with all tools & equipment they need to perform the work, they are instructed on when/how to perform their duties, they are on hourly rate and they are not able to delegate the work to someone else.
What are the consequences of failing to comply
Failing to comply with superannuation requirements have severe consequences and attracts penalties. Some are listed below.
Interest is payable on unpaid or partially paid super until the amount is paid in full.
There is also additional paperwork (Superannuation Guarantee Charge Form) that needs to be completed for each employee and each quarter where employer failed to pay super on time. This paperwork is required to be submitted with the ATO. If you haven't paid super for few employees for few quarters, prepare for a very time consuming exercise...
The ATO also charges an administrative penalty for each Superannuation Guarantee Charge Statement.
Unpaid or late paid superannuation is not tax deductible so as interest and penalties paid to the ATO.
Employers can be held personally liable for any unpaid or short paid superannuation owned to their employee.
This one off opportunity offers correcting past super obligation non-compliance without penalties. Ends on 23 May 2019. For those who voluntarily disclose past non-compliance (and who are not subject to SG audit) this represents a possibility of catching up on any superannuation shortfalls without administration penalties and they are also able to claim tax deduction for catch up payments. Interest is still required to be paid on unpaid amounts.
The amnesty applies to any unpaid or short paid contributions from 1 July 1992 to 31 March 2018.
Superannuation payment due dates at a glance
Quarter Payment due by:
July to September 28th October
October to December 28th January
January to March 28th April
April to June 28th July
Most of today's accounting software packages have super payment functionality enabled and staying on top of the super obligation has become much easier. Why not utilise these functions (including reminders) and rest in peace that your superannuation is up to date.
I hope the above information is useful. If you find yourself overwhelmed by the requirements and/or need an advise or assistance please don't hesitate to contact us - we are here to help! AND don't forget to have you super contributions for September quarter paid by 28th October 2018!
Enjoy your day!