Superannuation Guarantee was introduced by the Federal Government in 1991 initially with a charge of 3% on all eligible wages and subsequently increased in various stages to its current level of 9.5% of ordinary time earnings.
Compliance with the obligations of the SGC is critical as non-compliance can lead to significant penalties being imposed by the ATO.
In complying with your obligations pursuant to the SGC the following rules need to be observed:-
Returns must be lodged and paid on a minimum quarterly basis
The current charge is 9.5% of ordinary time earnings. This excludes overtime and other items such as termination payments, unused annual leave, long service leave, sick leave, payments in compensation for unfair dismissal, salary sacrifice amounts, employee wages less than $450 per month and employees under 18 who have worked less than 30 hours per week.
There are also certain contractors for whom SGC is payable. These are primarily where a contract is for labour only. For example, if you employ a freelance bookkeeper and the contract provides that the individual contracted must perform the work themselves but has an ABN and invoices for the hours worked then that individual is considered an employee for SGC purposes and the levy is therefore payable.
When employing the employee is required to advise the employer of their super fund details within 28 days of the commencement of employment or the employer must add them to their default fund.
As indicated there are significant penalties for failure to lodge and pay your SGC obligations on time. In summary, these are as follows:-
Where SGC payments are not made by the due date you are required to complete an SGC calculator form which will calculate any shortfall amounts plus interest charged at the current rate of 10% and in addition there is an administration charge of $20 per employee per quarter.
The total amount subsequently paid including interest and administration charges is not allowed as a deductible expense for taxation purposes where payments have not been received by the due date.
The net effect of this is that on top of the penalties imposed as the expense is not deductible for taxation purposes taxation at the company tax rate is payable on any such amounts.
The due dates for lodging and paying SGC liabilities are as follows:-
Quarter Period Due Date
1 1 July – 30 September 28 October
2 1 October – 31 December 28 January
3 1 January – 31 March 28 April
4 1 April – 30 June 28 July
The payments must be received by your superannuation clearinghouse by the due date. This means that the reports and payments should be made three days prior to the due date to ensure funds are received by the due date.
In order to ensure compliance, we recommend that our clients lodge their returns monthly particularly in light of the introduction of One Touch Payroll as the ATO has access to all payroll transactions and are aware of SGC liabilities.