Module 6: Rectifying late payments

Super guarantee charge and statement

If you're late paying your employees' super guarantee (SG), you'll need to calculate the super guarantee charge (SGC) and then complete and lodge a Superannuation guarantee charge statement. If you have paid late directly to the super fund, you may be able to apply the late payment offset if you meet certain conditions. You can use the Super guarantee charge statement and calculator tool to help you calculate the SGC.

Employers are required by law to lodge a Superannuation guarantee charge statement and are liable for the SGC if they either:

• don't pay the right amount of SG contributions to a complying super fund by the due date
• don't meet their choice of fund obligations by
  • providing their eligible employees with a choice of super fund, or
  • requesting a stapled super fund for employees who start on or after 1 November 2021 and does not provide choice.

The SGC is non-deductible against your business income.

SGC has the following 3 components:

• SG shortfall amounts (including any choice liability) calculated on your employee’s salary or wages (not ordinary time earnings)
• nominal interest on those amounts (currently 10%)
• an administration fee ($20 per employee, per quarter).

To report and rectify the missed payment, lodge a Superannuation guarantee charge statement and pay the SGC to us by the due date.

Due dates for super guarantee charge and statement

Super guarantee payments are due on specific dates for each quarter (as explained in Module 5).

The due date for payment of the SGC and lodging the Superannuation guarantee charge statement is one calendar month after the SG due date. This is shown in the following table.

Due dates by quarter

Quarter	Period	Super guarantee payment due date	Super guarantee charge and statement due date
1	1 July – 30 September	28 October	28 November
2	1 October – 31 December	28 January	28 February
3	1 January – 31 March	28 April	28 May
4	1 April – 30 June	28 July	28 August

Note: When a due date for payment falls on a weekend or public holiday, you can lodge the statement and make the payment on the next working day.

Calculating the super guarantee charge

To complete the Superannuation guarantee charge statement, you must work out the SGC.

The easiest option is to use the super guarantee charge statement and calculator tool. You can also work it out manually.

The SGC is calculated as:

• SG shortfall + nominal interest + administration fee.

Let’s explore each of these components and then look at the final calculation.

Calculating the super guarantee shortfall

Remember, the SG shortfall is calculated using salary or wages, not ordinary time earnings.

The calculation is:

• Salary or wages × super guarantee rate.

The following example is based on the SG rate for the financial year in which the employee was paid.

Calculating the nominal interest

Nominal interest is calculated from the first day of the quarter that the SG was not paid until the 'lodgment day'.

The 'lodgment day' is the later of either:

• the 28th day of the second month following the end of the relevant quarter (the due date)
• the day you lodge the Superannuation guarantee charge statement.

The calculation is:

• SG shortfall divided by the number of days in the year
  × number of days from the start of the quarter until the lodgment day × 10%.

Note: Once you become liable to pay the SGC, nominal interest accrues at least until the due date.

Calculating the administration fee

The administration fee is calculated for each quarter as follows:

• Number of employees for whom there was a shortfall × $20.

Super guarantee charge

The SGC is calculated by adding the 3 amounts together, as follows:

• Super guarantee shortfall + nominal interest + administration fee.

Benefits of paying super guarantee on time

It is easy to see the benefits of paying the SG on time by revisiting the example of Imogen.

The following examples are based on the super guarantee rate for the financial year in which the employee was paid.

 

If we compare these 2 examples:

• SG paid on time = $33,000
• SGC for late payment = $41,827.40.

The SGC adds an extra $8,827.40.

The SGC is paid to the ATO. It is then distributed to the employees’ complying super funds, less the administration fee.

The extra cost of late payment can be significant. This is particularly when you also consider the tax benefit on the deductibility of on-time payments when compared to the non-deductibility of the SGC.

Late payment

If you haven't paid your super guarantee on time, after calculating the super guarantee charge, you should complete and lodge the Superannuation guarantee charge statement and pay the charge to us.

If you've already made a late payment directly to your employees' funds, you may be able to:

• Use the late payment offset
• Carry the late payment forward.

Note: If you intend to apply to us to request an exercise of the discretion to reduce your SG shortfall resulting from non-acceptance of a contribution by a stapled super fund, you should do this before using the late payment offset or carrying the late payment forward.

In some circumstances the Commissioner may consider a reduction of the choice and SG shortfall which may arise from genuine attempts by an employer to meet their stapled super fund obligations from 1 November 2021.

There are 2 components to be considered for a reduction in shortfall:

• If you made the late super guarantee contributions to a fund that complied with the choice of fund rules when the most recently notified stapled fund did not accept the contributions, and
• If there were other mitigating factors or exceptional circumstances that affected the employer in making the super guarantee contributions or their compliance with the choice of fund rules.

Use the late payment offset

If you have a shortfall and you've paid the SG contributions directly to your employee’s fund late, you may choose to offset this amount as a ‘late payment offset’ against the SGC. You must meet certain rules. You are still liable to pay us the remaining amounts of the SGC.

There are some rules for electing the late payment offset. You'll generally be able to offset late payment amounts against the SGC if you:

• made the payment to your employee's super fund
• made the payment before the date your SGC assessment was made (this means your original assessment, not any subsequent amended assessments)
• lodge your late payment offset election with us within 4 years of your original super guarantee charge assessment date.

You will claim the late payment offset at Column G in the Employee details tab of the Super guarantee charge (SGC) statement. This notifies us that you are electing to offset the late payment against the SGC.

In making this decision, the late payment:

• is not tax-deductible
• can't be used as a prepayment for current or future super contributions
• can't subsequently be changed by you to offset an amount or revoke your election
• does not change the calculation of nominal interest.

Carry the late payment forward

If you have paid employee SG contributions late to the super fund, you can elect to ‘carry forward’ the late payment amount and apply it to a future quarter. This means that the late payment amount is counted towards your total payments for the chosen future quarter.

Don't include the late payment amounts at Column G in the Employee details tab of the Super guarantee charge (SGC) statement. This notifies us that you're electing to carry forward the payment.

You still have to pay the full SGC for the outstanding quarter with interest. In carrying forward the payment against a future quarter, you can claim that carry forward payment as a tax deduction.

You can carry forward a late payment only if:

• it's for the same employee
• the start of the quarter to which you’re carrying forward the payment is within 12 months of the actual payment date.

There are variables to consider to ensure this decision is beneficial. For example, if you're not making an income from your business there will be nothing to apply the tax deduction to. In this case, it might be more beneficial to use the late payment offset to reduce your SGC debt.

Talk to your tax adviser to determine the best outcome for your situation.

Completing the superannuation guarantee charge statement

The Superannuation guarantee charge statement records:

• the SGC calculations
• your decisions on whether you want to apply your late payment offset.

Choice liability

The Superannuation guarantee charge statement also records the amount of choice liability you may need to pay.

The choice liability is recorded at Column F in the Employee details tab of the Super guarantee charge statement.

The choice liability is the penalty for not complying with the choice of fund requirements. You pay it if:

• you haven't given your employee a Standard choice form within the required timeframe or when they asked for one
• you paid their super on time to a complying super fund but not the fund they chose
• the employee started working for you on or after 1 November 2021, and
  • didn't make a choice, and
  • you didn't request a stapled super fund for them, or
  • you didn't contribute to a notified stapled super fund
• you charge them a fee for implementing their choice of fund.

If you don’t give an eligible employee a choice of fund form or pay into a stapled super fund where the stapled fund rules apply, the payments will go to the employer-nominated fund instead of the employee’s super fund. These contributions are called 'no choice contributions'.

An employer's individual SG shortfall for an employee for a quarter is increased by the following formula, resulting in the choice liability:

• no choice contributions × 25%.

The liability is capped at $500 per employee, per notice period.

The notice period for an employee starts on the later of either:

• 1 July 2005
• the day on which the employee is first employed by the employer
• the day after the preceding notice period has ended.

A notice period ends when you're issued with a notice of assessment which includes the choice liability.

The choice liability doesn't apply if:

• you provide an employee with a choice form
• the employee doesn't nominate a super fund
• the Commissioner advised there is no stapled super fund for that employee (when the stapled fund rules apply), and
• their SG payments go to the default super fund.

When completing the Superannuation guarantee charge statement you must record the amount of choice liability to be paid, as it forms part of the SGC:

• If there is no choice liability, simply record zero at Column F.
• If there is a choice liability, you must calculate the liability and record it at Column F.

Using the super guarantee charge calculator tools

In the previous sections, we have manually calculated the SGC, including the choice liability and discussed how to complete the Superannuation guarantee charge statement.

The Super guarantee charge statement and calculator tool calculates the SGC, inclusive of choice liability, and prepares the Superannuation guarantee charge statement. It is easier and faster than doing the calculations manually.

To use the tool you will need:

• your business' tax file number (TFN) or Australian business number (ABN)
• the personal detail of all relevant employees, including their
  • names
  • TFNs
  • dates of birth
  • super fund details
• salary or wage amounts and payment dates for each quarter for all relevant employees
• all super payment amounts and dates for all relevant employees.

Take a few minutes to explore the Super guarantee charge statement and calculator tool.

If you work out the charge amount using our calculator and choose to pay your employee's super fund directly, you will need to lodge the Superannuation guarantee charge statement with us on the same day you pay the funds, to avoid nominal interest continuing to accrue.

To stop nominal interest accruing you must lodge the Superannuation guarantee charge statement with us once you become liable to pay the SGC.

Lodging the superannuation guarantee charge statement

You must complete the Super guarantee charge (SGC) statement and follow the lodgment instructions provided. You can lodge your completed Superannuation guarantee charge statement spreadsheet through Online services for business or Online services for agents.

If you are unable to lodge electronically, phone us on 13 10 20 for an alternative option.

Check your understanding

Work through the example below to check your understanding of the topics in this module. The example is based on the super guarantee rate for the financial year in which the employee was paid.

Answers

Question 1: A is correct. You are required to lodge a Superannuation guarantee charge statement before 28 November 2023. This is because Kids Can Do had a super guarantee shortfall for the quarter and did not pay by the due date (28 October 2023).

Question 2: A is correct. The super guarantee charge is calculated as super guarantee shortfall + nominal interest + administration fee.

Question 3: A is correct. The super guarantee shortfall is calculated as: Salary or wages × the super guarantee rate = $40,000 × 11% = $4,400. The super guarantee rate for 2023–24 is 11%.

Question 4: B is correct ($180.82). Nominal interest accrues from the start of the quarter up to but not including the lodgment day.

Remember, the lodgment day is either the day you lodge the Superannuation guarantee charge statement OR the 28th day of the 2nd month following the end of the quarter, whichever is the later. There are 150 days from 1 July to 28 November (the later of the 2 days – not including 28 May).

The nominal interest is calculated for 150 days at 10% per annum.

Nominal interest = super guarantee shortfall × 150 days ÷ 365 days × 10% = $180.82.

Question 5: B is correct. The administration fee is calculated as: Number of employees × $20 = 12 × $20 = $240.

Question 6: A is correct. The super guarantee charge = super guarantee shortfall + nominal interest + administration fee = $4,400 + $180.82 + $240 = $4,820.82.

Question 7: A is correct. The law requires the statement to be lodged and the payment made to the ATO where SG contributions have not been made to a fund by the relevant quarterly due date.

Summary of Module 6

Remember, when rectifying late payments:

• lodge your Super guarantee charge (SGC) statement by the due date
• calculate the super guarantee shortfall using salary or wages, not ordinary time earnings
• calculate the nominal interest from the first day of the quarter
• an administration fee of $20 per employee, per quarter applies
• contact us if you need to arrange a payment plan.

Return to Module 5: Paying super contributions.

Continue to Module 7: Reducing the risk of penalties.