NEVER, EVER PAY YOUR SUPER LATE…
The Superannuation Guarantee legislation requires employers to pay their 9% employee super obligations by the 28th day following the end of each quarter i.e. by 28th July, 28th October, 28th January and 28th April.
The Superannuation Guarantee system is self assessing i.e. you as the employer are expected to inform the ATO when you haven’t complied.
Up until now there has been very little audit activity by the ATO…
NOT ANY MORE!!
Recently, I attended an ATO audit for a client. This audit concentrated on employer responsibilities, which included PAYG Withholding, superannuation, FBT and contractors.
I returned to the office and had a phone message that the ATO wanted to audit another client.
Admittedly these were both ‘large payer’ clients i.e. their annual PAYG (W) obligations were greater than $1,000,000 but what it did show was the ATO were starting to take an interest.
CONSEQUENCES OF NOT PAYING ON TIME
There are some severe penalties:
- 1. Under the Superannuation Guarantee legislation, the 9% requirement is calculated on Ordinary Times Earnings, which doesn’t include overtime for example.
If you pay late, the 9% is calculated on all salaries, wages, overtime, allowances etc. etc. etc.
- 2. You have to pay 10% interest calculated back to the beginning of the quarter that is late.
- 3. You have to pay $20/employee admin fee
- 4. NONE of the above payments are tax deductible.
Pay your super guarantee requirements monthly to help minimise any problems.
As it turns out, the client who had the audit had in fact paid four months in different quarters late.
We were able to ‘rearrange’ their payments to minimise the damage and whilst it was still a costly exercise, we were able to ensure this damage was reduced by over $40,000.
To help, you must contact us as soon as you know you are late paying.
This is another area that is confusing for some when it comes to super obligations.
An individual contractor is one who is not a partnership, trust or company, invoices you for more than $450 in one month and the invoice is primarily for labour i.e. more than 50%, is prima facie an employee for superannuation purposes and you must pay 9% super for the contractor on the total invoice rendered (not just the labour content).
TIP: Simple, don’t hire individual contractors but if you do, get separate invoices for labour and materials.
NOTE: An individual contractor still may not have super obligations. If he has his own employees, then he won’t as you are now contracting time to ‘get the job done’ and not for him to ‘do the job’.
If he is able to delegate the work to others in his control then he is prima facie, not an employee for superannuation guarantee purposes.