Simplifying and reducing the harshness of the superannuation guarantee charge

On 20 January 2015, the former Minister for Small Business, the Hon Bruce Billson MP, announced changes to simplify and reduce the harshness of the superannuation guarantee (SG) charge. These changes will apply to quarters starting from 1 July 2016.

Under the Superannuation Guarantee (Administration) Act 1992 (SGAA), employers must make quarterly SG contributions for their eligible employees to avoid having to pay the SG charge to the Australian Taxation Office. The SG charge regime imposes punitive costs to deter employers from paying their SG contributions late or in part. This can have a significant impact on small businesses.

The current SG charge arrangements will be amended to:

  • align the nominal interest on unpaid SG contributions with the period over which SG contributions are outstanding;
  • replace the current earnings base for calculating the SG charge (total salary and wages) with the base used to calculate SG contributions (ordinary time earnings);
  • align the penalties imposed under the SG legislation with the general tax penalty provisions

Legislation and supporting material

On 21 August 2015, exposure draft legislation and explanatory material were released for consultation by the Treasury. The closing date for submissions was 18 September 2015.

More information

    Last modified: 02 Nov 2015QC 47237