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Super Contribution Advice to Save You Money

Important Advice to Avoid Superannuation Contribution Late Payment Penalties

Superannuation contributions must be received by the superannuation fund within 28 days of the end of a quarter.

There is a common misconception that superannuation contributions must be paid by the 28th day after quarter end. This is not correct. It is the date of receipt by the superannuation fund that is important. However, if you are using the ATO Small Business Clearing House and funds are paid by the 28th day following the end of the quarter, the contributions would be considered as made on time.

The Australian Superannuation Guarantee system is designed to severely penalise employers. This is because the employer must pay, at least, the Superannuation Guarantee Charge (“SGC”).

For a quarter, this involves:

1. The late superannuation contributions; plus

2. Extra contributions due to a higher earnings base being used; plus

3. 10% interest calculated from the beginning of the quarter to the time of lodgment of the Superannuation Guarantee Statement or assessment; plus

4. A $20 charge per employee.

In addition to the SGC, penalties can be levied if you have not lodged with the ATO a Superannuation Guarantee Statement. These penalties can be up to 200% of the SGC. Both the SGC and the penalties are not tax deductible. It will often be the case that the combined after-tax amount of the SGC and penalties is many multiples of the superannuation contributions paid late.

We warmly encourage you to watch this short video so that you are fully informed about this issue. Please do not hesitate to contact our office if you have further questions.