How businesses can avoid an expensive mistake

Superannuation errors can be costly to small businesses when left unaddressed, the tax office warns.

1 June 2022 

The ATO said there was a lot to think about when running a business, however, leaving things like paying super for workers can end up being very costly.

“If you don't pay the right amount of super guarantee (SG) for your workers on time and to the right fund, you'll need to lodge and pay the SG charge to us within a month of the SG quarterly due date,” the ATO said.

“The way you calculate the charge is different from paying SG to your employees' funds.” 

The SG charge would cost more and involved super calculated on an employee's total salary and wages (including overtime and some allowances).

This also included nominal interest (calculated at 10% per annum) and an administration fee of $20 per employee, per quarter.

The ATO said another benefit of making SG payments on time was that businesses could claim a tax deduction for them. 

“You can't claim deductions for SG charge amounts,” the ATO said.

“Even if you can't pay in full, it's important you still lodge your SG charge statement to us by the due date to avoid additional penalties of up to 200%. We can work with you to set up a payment plan to suit your circumstances.”

If businesses request an extension of time to lodge an SGC statement, the general interest charge (GIC) would apply from the deferred payment request until the SGC is paid in full.

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“You must make the request before the due date by either writing to us and stating why you need an extension and phoning us on 13 10 20,” the ATO said.

“We prioritise the collection of unpaid SGC debts. We’ll work with you to address outstanding amounts but if you don’t engage with us, we’ll take stronger action which can include additional penalties.

For businesses taking on workers for the first time, the ATO said it was important to work out the processes for paying super for the first time.

“Even if a new staff member is a relative or only helping occasionally, you'll need to work out if they're eligible for super,” the ATO said.

“Working out where to pay super for your worker is easy if your worker nominates an eligible super account. You must offer your new worker a Superannuation standard choice form so they can give you the details for their super fund.

“If your worker doesn't choose a super fund, you may need to request details for your employee's existing fund, known as a stapled super fund, from us. If we have no details, you will need to create a new super account for them.

“Remember, you can reach out to a trusted adviser, such as a BAS or tax agent, bookkeeper, or payroll provider to help you meet your super obligations.”  

From 1 July 2022, employers will need to pay super for employees, regardless of how much it pays them. This is because the $450-per-month threshold for super guarantee (SG) eligibility is being removed. 

At the start of July, the super guarantee rate will also increase from 10% to 10.5%.

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