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As an employer, it is your obligation to pay your employees’ superannuation contributions on time and in accordance with their choice of fund.1
It’s a serious professional responsibility (and fiduciary duty) and failure to meet your obligations could attract unwanted attention from the Australian Tax Office (ATO).
It’s not only officialdom that keeps an eye on how you are meeting your super obligations. The public focus on funding retirement means employees are rightly taking a greater interest in their superannuation accounts, too. Luckily for employers, there is plenty of information available to guide you on how to do the right thing.
It is essential employers pay super contributions on time to avoid penalties2. The law requires employers to pay at least four times a year, at the end of each financial quarter. The due dates for payment are set at four weeks after the end of the quarter.
If the due date falls on a weekend or public holiday, the ATO allows payments to be made on the next business day. You also need to factor in processing times of your super fund to ensure contributions processed by the due date.
You can pay more frequently if you wish – indeed, some super funds, awards and contracts require increased payment frequency – and that’s fine, as long as the amount owing for the quarter is paid in full by the due date.
These stipulations apply only to the 10.5% – as of 1 July 2022 – of ordinary time earnings (OTE) required to be directed to a fund under the Superannuation Guarantee (SG) rules.
If an employee has an arrangement with you to make extra after-tax payments to their super fund, these are not tied to the due-date requirements and don’t count as part of your SG payment obligation and should be transferred to the nominated fund promptly.
An important detail to keep in mind is that an employee's super contribution is counted as being paid on the date their fund gets it, not the date the money is sent. More information about “clearing houses” used by some employers to distribute super payments on their employees’ behalf can be found here.
If you don’t pay the necessary SG amount (which is tax deductible as a business cost) by the due date, it is going to cost you money. You will be required to report the delay to the ATO and pay a Super Guarantee charge.3
The charge, which is not tax deductible, is made up of the payment shortfall, accruing interest (the current rate is 10%) and administration fees. You must pay the charge by a new due date, which is a month after the original super contribution payment due date. Employers can apply for an extension of time to pay.
Continued avoidance is a serious matter. The ATO has a range of options to recover money owed to employees, and some hefty penalties for employers who don’t comply.
Contact our Employer Solutions team
1. Super for employers | Australian Taxation Office (ato.gov.au), accessed 19 May 2022
2. Missed and late super guarantee payments | Australian Taxation Office (ato.gov.au), accessed 19 May 2022
3. Super payment due dates | Australian Taxation Office (ato.gov.au), accessed 19 May 2022
This content is provided for information purposes only using sources that we believe are reliable and accurate at the time of publication. We make no representations as to accuracy, completeness, suitability, or validity of any information provided and you should get professional advice for your own circumstances.