What are my employer obligations for superannuation and what happens if I miss this? If I do miss it, how does the superannuation guarantee charge work?
As an employer, you are required to contribute payment of superannuation towards retirement funding for your employees and even for contractors in some circumstances.
The Super guarantee (SG) is the minimum amount you must pay to avoid the super guarantee charge. The Super guarantee is currently 10% of an employee’s ordinary time earnings, due to increase over the next few years.
Super needs to be paid 28 days after the end of each quarter. See our due dates FAQ for more information.
What is a Superannuation guarantee charge (SGC)?
If you do not pay an employee's minimum superannuation guarantee amount on time and to the right fund, you must:
- pay the superannuation guarantee charge (SGC); and
- lodge an SGC statement with the ATO.
You must lodge the SGC statement 1 month after any missed superannuation payment.
The SGC is more than the super you would have otherwise paid to the employee's fund and is not tax deductible. When eligibility requirements are met, late super payments can be used to offset the SGC, pay super in the current quarter or put the payment towards future super payments.
Working out the SGC
The superannuation guarantee charge is made up of a number of factors including a “super guarantee shortfall” (basically the unpaid super + a “no choice” penalty), nominal interest of 10% per annum and an administration charge of $20 per employee per quarter.
Working out your SGC can be a little tricky, so the ATO provides some useful tools to help employers with their calculations. These include the ATO’s electronic SGC Statement Calculator Tool and an Excel spreadsheet version of the calculator.
Why lodge the SGC statement on time?
When you lodge on time, you can access ATO support services that provide help with paying. If you cannot pay in full, but you lodge by the due date, you may be able to set-up a payment plan to pay in instalments.
If you miss a due date, interest for paying super will accrue until you lodge your SGC statement. Nominal interest is part of the SGC and, by law, cannot be reduced or waived.
If you pay, but are late, there are also options to offset any late payments against any superannuation guarantee charges.
- Due dates [Standard Ledger FAQ]
- Super guarantee [ATO Website]
- The Super guarantee charge [ATO Website]
- SGC Statement Calculator Tool [ATO website]
- Super guarantee percentage [ATO website]
- Missed and late super guarantee payments [ATO Website]
- Super for contractors [ATO website]