Director’s liability for unpaid Super
If you’re an employer, you should be aware that your business must pay 9.5% on top of each employee’s wage into their superannuation fund. This must be paid at least quarterly – and this quarter’s super payments are now due.
Why super payments must be made regularly
The rules around mandatory employer superannuation contributions have been designed to protect employees and ensure that they receive the benefits that they’re entitled to. Regular payments are required to ensure that cash flow issues for the employer don’t result in lost funds for the employee. While it’s often tempting to delay payment – after all, employees are typically unaware of their superannuation contributions status – and redirect those funds to more pressing concerns, it’s a temptation that we strongly recommend you avoid acting upon. The ATO has set very specific rules around super contributions from employers, and there are some hefty and aggressive penalties in place for businesses that don’t comply. While directors can be protected from many business liabilities with the correct company structure, this is not the case for superannuation non-compliance. If your company has unpaid super contributions, directors are held personally responsible for the penalties and payments required.
How to make on-time super contributions
SuperStream was created to simplify the task of making employee superannuation payments. There are a number of ways that you can send payments through the SuperStream system:
- Payroll system: most will include the ability to calculate superannuation contribution requirements and send data about payments and employee super funds.
- Your super fund: some superannuation fund managers will distribute contributions for you; you’ll just need to send the required contribution data and payment to them.
- Superannuation clearing house: a clearing house can also distribute employer contributions for you.
[VIDEO LINK: https://www.ato.gov.au/Super/SuperStream/Employers/]
How to make LATE super contributions
It’s not enough to simply make super contributions if you’ve passed the due date. You’ll need to fill out a superannuation guarantee charge statement and pay a Superannuation Guarantee Charge. The charge includes:
- Any outstanding contribution amounts.
- Interest on outstanding payments (10%, on 17 August 2016)
- An administration fee of $20 per employee per quarter.
Read more on the ATO website.
It’s easier and cheaper to pay on time
Avoid super pain – pay your employer super contributions when they’re due!