For business: Superannuation penalties now harsher than ever!

As a business owner, you probably already know that lodging on time with the ATO is an integral part of keeping your business moving. It allows you to stay on track with your accounting and bookkeeping and employee requirements like Payroll and Superannuation.

At Nexis, we’d like to dive further into the importance of paying your superannuation payments on time – and the consequential penalties that follow if it isn’t done correctly.

What has changed / now required?

As our clients would be aware from previous articles, an amnesty was available until September 2020 allowing for late and missed superannuation payments to be disclosed and brought up to date.  This indicated an intention that from this time, the ATO would be far less lenient on late superannuation payments.

It is now more important than ever that any late payments of superannuation are reported to the ATO via a superannuation guarantee charge statement.  If this is not done, interest and penalties can continue to accrue even if you have subsequently paid the late super.

The ATO has also issued a Practice Statement (see below) which discussed the requirements that need to be met in order for the ATO to reduce penalties (known as remission) on late super payments.

What is the remission of additional SG penalty?

Simply put, a super guarantee charge is the penalty imposed by the ATO if the correct super isn’t paid or lodged on time.

An additional penalty of 200% of Super Guarantee Charge (SGC) amount is imposed if an employer fails to lodge Super Guarantee statement by due date, but ATO has discretion to remit some or all of the penalty.

The ATO guidance on remission of Super Guarantee penalties details a 4-step process aimed at recognising the full range of compliance behaviours in Super Guarantee matters.

What is a Practice Statement?

The PS is an internal ATO document used by ATO officers when they are looking at business documents specific to your business. Using these documents, an ATO officer is guided on how to make decisions with respect to the particular tax issue. In this case, if you have not paid your super on time and/or have not reported it correctly, this tells the ATO how penalties are to be determined.

The ATO is advising that there is very little flexibility if super is not paid in the correct manner, and that clients need to be aware of super payment deadlines to avoid these penalties on a quarterly basis.

To help our clients lodge on time, we will be sending quarterly reminders via our email newsletter, with adequate notice time for the payments to clear to the superfunds, clearing houses or ATO.  If you are a Nexis business client, you can sign up below to receive quarterly super payment reminders.

Quarterly Super reminders

By signing up for quarterly super reminders with Nexis, you will receive an email that gives you adequate notice for paying your super in time.

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