Employers Beware of Huge Penalties for Late Payment of Super: ATO data matching has begun

Nov 14, 2020

With the recent introduction of Single Touch Payroll and Super reporting, it was inevitable that the data would eventually be used to automatically detect late or unpaid super. The potential penalties for paying super late are massive so it is critical that all super is paid before the 28th day after the end of each quarter.

The ATO have begun a data matching program which matches the expected super payable from Single Touch Payroll data with actual super paid from Superstream data. Notices have begun to be issued where payments were made late, requiring employers to lodge a Superannuation Guarantee Charge statement. The consequences of this are:

  • An administration fee of $20 per employee per quarter
  • An interest charge (currently 10%p.a.) for each late payment
  • The loss of tax deductibility on late super payments
  • A penalty of between 100% and 200% of the super guarantee charge (Super shortfall plus admin charge plus interest)

As an example, if an employer was one month late paying $10,000 of super payments for ten employees, the consequence would be:

Penalty type

Amount

Admin Charge

$200

Interest

$83

Loss of tax deduction on super payment (eg Company tax rate 26%)

$2,600

Up to 200% Penalty

$20,566

The total of the above penalties for paying a $10,000 super payment one month late could be $23,449. It is a totally out of proportion penalty that employers need to do everything they can to avoid. In addition to the penalties, a Superannuation Guarantee Charge Statement will need to be prepared and lodged which is very time consuming.

If you do miss a payment due date you can avoid the 200% penalty by lodging a Superannuation Guarantee Charge Statement before the ATO prompts you. If you lodge the Statement voluntarily, the total penalty in the example above would be reduced to $2,883.

The due dates for paying super each quarter are:

Quarter

Due date for payment

1st July to 30th September

28th October

1st October to 31st December

28th January

1st January to 31st March

28th April

1st April to 30th June

28th July

Employers should ensure super reporting is processed comfortably before the above dates as most providers take at least a few days to process payments. We would therefore recommend you process and pay your super payments at least a week before the due date to ensure penalties are avoided.

There are strategies to reduce penalties if you have paid multiple quarters late so that you may only be penalised for one quarter rather than multiple quarters. If you are an employer in this situation please contact us for assistance with completing your Superannuation Guarantee Charge Statement.

It is now more critical than ever that super payments are made on time as any late payment is highly likely to be detected.