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  • Module 6: Rectifying late payments

    If you're late paying your employees super, you'll need to calculate the Super Guarantee Charge (SGC) and then complete and lodge a Super 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 SGC and statement calculator to help you calculate the SGC.

    Super guarantee charge and statement

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

    • they do not pay the right amount of super guarantee contributions to a complying super fund by the due date, or
    • do not 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 commence on or after 1 November 2021 and does not provide choice.
       

    The super guarantee charge is non-deductible against your business income. It has 3 components:

    • super guarantee 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 super guarantee charge to us by the due date.

    In some circumstances the Commissioner of Taxation 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 pay to the wrong fund, there is choice shortfall which may be remitted (this also applies to choice shortfalls arising from stapled funds)
    • if you pay late to the right fund only due to the stapled fund requirements, and in certain circumstances we may consider reducing the actual SG shortfall under 19(2F) and 19(2G) of the Superannuation Guarantee (Administration) Act 1992 (SGAA 1992).

    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 super guarantee charge and lodging the statement is one calendar month after the super guarantee due date. This is shown in the table below.

    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.

    Example: Working out due dates for the super guarantee charge and statement – quarter 1

    For quarter 1 (1 July to 30 September), super guarantee contributions are to be paid to a complying super fund by 28 October.

    If you miss paying your super guarantee to a complying super fund by 28 October, you have until 28 November (one calendar month later) to pay the super guarantee charge and lodge the Superannuation guarantee charge statement with us.

    End of example

    Calculating the super guarantee charge

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

    The easiest option is to use the Super guarantee charge (SGC) statement and calculator tool or you can work it out manually.

    The super guarantee charge is calculated as:

    • super guarantee 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 super guarantee shortfall is calculated using salary and wages, not ordinary time earnings.

    The calculation is:

    Salary and wages × current super guarantee rate.

    The example below is based on the super guarantee rate for the financial year in which the employee was paid.

    Example: Calculating the super guarantee shortfall

    Imogen is an employer with 30 employees.

    During quarter 4 of the financial year 2022–23 (1 April to 30 June 2023), each employee earns $12,000 in salary and wages (including $2,000 in overtime).

    Imogen calculates her super guarantee shortfall in 2 steps, as follows:

    1. Salary and wages (for 30 employees) = $12,000 × 30 = $360,000
    2. Super guarantee shortfall = salary and wages × 10.5%

    = $360,000 × 10.5%

    = $37,800.

    End of example

    Calculating the nominal interest

    Nominal interest is calculated from the first day of the quarter that the super guarantee 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 day you lodge the Superannuation guarantee charge statement.

    The calculation is:

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

    Example: Calculating nominal interest

    Imogen works out how many days her super guarantee was not paid for in quarter 4.

    Imogen counts the number of days from 1 April 2022 until the day the statement is lodged, which is 17 September 2022. This is 169 days.

    She calculates her nominal interest as:

    Super guarantee shortfall divided by the number of days in the year × number of days from the start of the quarter (up to but not including the lodgment day) × 10%.

    • Super guarantee shortfall ÷ 365 days (1 year) × 169 days × 10%

    = $37,800 ÷ 365 × 169 days × 10%

    = $1,750.

    End of example

    Note: Once you become liable to pay the super guarantee charge, to stop nominal interest accruing you must lodge the Superannuation guarantee charge statement with us.

    Calculating the administration fee

    The administration fee is calculated for each quarter as follows.

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

    Example: Calculating the administration charge

    Imogen calculates her administration fee for quarter 4:

    Number of employees × $20

    = 30 employees × $20

    = $600.

    End of example

    Super guarantee charge

    The super guarantee charge is calculated by adding the 3 amounts together, as follows.

    Super guarantee shortfall + nominal interest + administration fee.

    Example: Calculating the super guarantee charge

    Imogen's super guarantee charge for quarter 4 is:

    Super guarantee shortfall + nominal interest + administration fee

    = $37,800 + $1,750 + $600

    = $40,150.

    End of example

    Benefits of paying super guarantee on time

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

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

    Example: Paying super guarantee on time and to the correct funds

    During quarter 4 of 2022–23 (1 April to 30 June 2023), each of Imogen's employees earn $12,000 in salary and wages.

    For each employee, $2,000 of their total salary and wages is paid for overtime. As overtime does not form part of ordinary time earnings, each employee’s ordinary time earnings for the quarter are $10,000.

    For quarter 4, Imogen pays super guarantee on the ordinary time earnings of all employees, calculated as follows:

    The total ordinary time earnings for her 30 employees is $300,000.

    Super guarantee for the quarter (ordinary time earnings × 10.5%)

    = $300,000 × 10.5%

    = $31,500

    Imogen pays the $31,500 on time (by 28 July) into the complying super fund accounts for her employees. The $31,500 is tax deductible for the business.

    End of example

      

    Example: Super guarantee not paid on time

    For quarter 4 of 2022–23 (1 April to 30 June), the super guarantee due date is 28 July.

    However, Imogen doesn't pay it on time. On 17 September, she realises she hasn't paid the super guarantee (seven weeks after the due date).

    She decides to lodge the Superannuation guarantee charge statement and pay the super guarantee charge that same day.

    Imogen phones the ATO to notify us of her error and explains what she'll do to rectify the late payment.

    As Imogen hasn't paid the super guarantee on time, she lodges a Superannuation guarantee charge statement showing the amount of super guarantee charge she has to pay.

    Referring back to the example in Calculating the super guarantee charge, Imogen's super guarantee charge liability is calculated to be $38,266.

    Imogen is required to send the Superannuation guarantee charge statement to us by 28 August. As she hasn't lodged by the due date she may also be liable for additional super guarantee charge – known as the Part 7 penalty.

    This extra charge is explained further in Module 7.

    End of example

    If we compare:

    • Example 1 – super guarantee paid on time = $31,500
    • Example 2 – super guarantee charge for late payment = $40,150.

    The charge adds an extra $8,650.

    The super guarantee charge 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, particularly when you consider the deductibility of on-time payments and the non-deductibility of the super guarantee charge.

    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:

    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.

    Use the late payment offset

    If you have a shortfall and you've paid the super guarantee and nominal interest directly to your employee’s fund, you may choose to offset this ‘late payment’ against the super guarantee charge, provided you meet certain rules. You will still be required to pay us the administration fee.

    Example: Using the late payment offset

    Imogen subtracts the administration fee from the super guarantee charge, as follows:

    $40,150 − $600 = $39,550

    Imogen pays the super guarantee of $39,550 (including nominal interest) directly to her employees' funds.

    She pays the $600 administration fee to the ATO.

    End of example

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

    • made the payment to your employee's super fund
    • made the payment before the date your super guarantee charge 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 super guarantee charge.

    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

    You can elect to ‘carry forward’ your late payment and apply it to a future quarter.

    Do not include the late payment amounts at Column G in the Employee details tab of the Super guarantee charge statement and calculator tool.This notifies us that you're electing to carry forward the payment.

    You still have to pay the full super guarantee charge 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 super guarantee charge 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 super guarantee charge 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 (SGC) statement.

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

    • you haven't given them 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 did not make a choice, you did not request a stapled super fund for them or you did not 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 super guarantee 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)
    • their super guarantee 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 super guarantee charge:

    • 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 sections above, we have manually calculated the super guarantee charge, including the choice liability and discussed how to complete the Superannuation guarantee charge statement.

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

    To use the super guarantee charge statement and calculator 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 calculator.

    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 super guarantee charge.

    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.

    Example: Rectifying late payments

    You are the director of a not-for-profit organisation, Kids Can Do. One of your staff advise you that their super guarantee contribution has not been paid for the quarter ended 31 March 2022.

    You realise the error occurred as the bookkeeper quit suddenly and nobody was able to gain access to the books for a couple of weeks.

    On 17 May 2022, you get access to the books. You realise that super contributions for salary and wages, totalling $40,000 for the quarter, have not been paid before the due date of 28 April 2022. All salary and wage payments meet the definition of ordinary time earnings.

    This affects all 12 staff employed by Kids Can Do.

    You contact the ATO on 17 May to let us know what has happened and complete the Superannuation guarantee charge statement.

    Try the following questions. What would your answers be?

    Question 1: When must you lodge a Superannuation guarantee charge (SGC) statement?

    A. On or before 28 May 2021

    B. On or before 28 July 2022

    Question 2: Which calculation do you use to work out the super guarantee charge?

    A. super guarantee shortfall + nominal interest + administration fee

    B. ordinary time earnings + nominal interest + administration fee

    Question 3: What is the super guarantee shortfall amount?

    A. $4,200

    B. $4,000

    Question 4: What is the nominal interest payable if you lodge the Superannuation guarantee charge statement on or before its due date?

    A. $400

    B. $161

    Question 5: What is the administration fee payable?

    A. $220

    B. $240

    Question 6: What is the super guarantee charge amount?

    A. $4,401

    B. $4,640

    Question 7: You have calculated the super guarantee charge. What should you do now?

    A. Lodge the Superannuation guarantee charge statement and pay the super guarantee charge amount to the ATO.

    B. Pay the super guarantee shortfall and the nominal interest to your employees' super funds, lodge the Superannuation guarantee charge statement and pay the ATO the administration fee.

    C. Either A or B.

    End of example

    Answers

    Question 1: A is correct. You are required to lodge a Superannuation guarantee charge statement before 28 May 2022. This is because Kids Can Do had a super guarantee shortfall for the quarter and did not pay by the due date (28 April 2022).

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

    Question 3: B is correct. The SGC shortfall is calculated as: Salary and wages × 10% = $40,000 × 10% = $4,000. The SG rate for 2021-22 is 10%.

    Question 4: B is correct ($161). 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 149 days from 1 January to 28 May (the later of the 2 days – not including 28 May).

    The nominal interest is calculated for 147 days at 10% per annum.

    Nominal interest = SGC shortfall × 147 days ÷ 365 days × 10% = $161.

    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 = $4,000 + $161 + $240 = $4,401.

    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 and wages
    • calculate the nominal interest from the first day of the quarter
    • an administration fee of $20 per employee, per quarter applies
    • contact us as soon as you realise there will be a delay in payment.
      Last modified: 01 Jul 2022QC 58510