There has never been a more important time for businesses to be both aware and up to date with their super obligations. Having been in the accounting industry for well over a decade, I can say with confidence that the ATO has never been so proactive in auditing businesses who are not keeping up to date with their obligations.
The driver behind the ATO activity is the near live visibility of what super should be getting paid and what has actually been paid by businesses. Many will have heard of Single Touch Payroll (STP) which requires employers to submit all pay slips to the ATO as and when they are paid, but may not realise that this reporting also gives the ATO live visibility of that employers super obligations. Conversely, super funds also report to the ATO exactly what super payments they have received which completes the picture for the ATO.
Historically, the ATO would only be able to obtain all of this information by completing a Superannuation Guarantee (SG) audit which would arise when they were dobbed in by a disgruntled employee.
There are a number of questions we need to consistently answer for clients when it comes to their super obligations which include:
What happens if I get a super audit from the ATO?
In the event of a super audit, you will be required to complete a Superannuation Guarantee Charge (SGC) Statement for each quarter being audited. This statement will calculate the following:
- A $20 admin fee per employee per quarter
- How much super is owing to each employee
- Interest between the due date and the date the form is being prepared
Will I get penalised?
The ATO can (and do) impose penalties ranging from 10% to 200% of the outstanding super balance dependent on the balance outstanding and whether you have a history of not paying super.
Do I still get a tax deduction if I pay my super late ?
Simply, no. You do not get a tax deduction if super is paid late which is a massive penalty in itself before the ATO levies the penalty above. If super for the quarter was say $10,000 and you paid it 1 week late, it is not tax deductible. The additional tax now payable will likely range from $2,500 to $3,900 for most employers.
“I only pay subcontractors so I don’t have to pay super”…
This is NOT TRUE in a lot of circumstances. Where a subcontractor is operating as a sole trader and invoicing primarily or solely for their labour (usually on an hourly rate), it is extremely likely they will be considered an employee for the purpose of super.
Payment of subcontractor super would be an absolute gold mine of non-compliance for the ATO. Subcontractor payments are not reported to the ATO via STP reporting so they do not have full visibility to enforce these rules as effectively as super owing to employees, but I believe it is only a matter of time.
Many businesses are not aware of refuse to consider paying super to their eligible subcontractors which is a ticking time bomb in my opinion. If the subcontractor reports their deemed employer to the ATO, they could be forced to repay superannuation owed for the full period of the engagement + fees + interest + penalties and they won’t get a tax deduction for paying any of it. We have seen this occur for engagements dating back over 15 years.
What should I do if I can’t pay my super on time?
We highly recommend that an SGC statement is lodged with the ATO on the due date. The benefits of doing so include:
- The super debt is realised with the ATO which now means you can enter a payment arrangement with the ATO to pay off the super owing.
- The ATO is extremely unlikely to penalise you
- You significantly reduce the likelihood of an Audit
How can I stay on top of my super obligations?
All major payroll/accounting software providers now have a built in ‘super clearing house’ to provide a quick and easy solution for making super payments.
Once setup, it does not take any longer than a minute to process a super payment. The payment instruction is submitted and then the funds are direct debited from the nominated business account and paid directly to the super funds on your behalf.
Given this simplicity, we highly encourage employers to pay their super every single time they complete a pay run. This is far more manageable from a cash flow perspective as it doesn’t allow a much bigger liability to build over the course of the quarter.
From 1 July 2026, the ATO will be introducing ‘Same Day Super’ which will make it compulsory for employers to pay superannuation on the same day as the wages.
If you need help with understanding your super obligations, please contact us