As you are undoubtedly aware, superannuation is heavily regulated and one of the Australian Taxation Office’s most closely watched obligations. Although the restriction governing superannuation responsibilities may appear excessive, there is a reason such rules and limitations are in place. Superannuation is defined as “money saved by the employer during your working life for you to live on when you retire”.
As a result, superannuation is exceptionally significant in the lives of all Australians. Because this is critical to our future well-being, the ATO imposes fines and costs on employers that fail to comply with the super responsibilities compliance duties. Knowing the proper procedure and ensuring compliance may be difficult for an employer. This is why, in the end, what you don’t know and choose not to learn about your super duties can be detrimental to your firm. That is when Business Tax Accountants in Brisbane can help you out.
On that point, we have done the legwork for you, so you don’t have to. Here are the most typical compliance duties that companies ignore and the severe penalties that come with them.
Some Compliance Duties-
- Requirement For Record-keeping– Each quarter, you must pay a minimum amount of superannuation to your worker’s funds as an employer. The current rate (as of December 2021) is 10% of regular-time wages. This is expected to climb by 0.5 per cent every year in the following years. Ordinary time earnings include over-award payments, specific bonuses, allowances, and special paid leave received during regular work hours. Overtime pay is typically not included in regular hourly earnings. A payroll system is the most efficient way to track these superannuation obligations. At Southern Cross Accounting, we adore Xero software and recommend it to all clients who process payroll. Tax & Accounting Services in Brisbane helps you with these.
- Failing To Be Timely– According to the statute, even if you are one day late with the superannuation guarantee contribution reaching the fund, these late responsibilities must be disclosed to the ATO via a Superannuation Guarantee Charge statement. Please keep in mind that the payment must reach the workers’ fund, so if you use a clearinghouse (such as the ATO or Xero), make the payment a week or so ahead of time to ensure it clears on time. The following are the quarterly cut-off dates for Super obligations:
- July to September – due by 28 October
- October to December – due by 28 January
- January to March – due by 28 April
- April to May – due by 28 July
- The Impact Of Not Having A Good Record is essential to provide precise and detailed information. Maintaining suitable records and having documentation to back up your calculations is critical if you are examined or audited by the ATO. If you don’t and the ATO discovers that you made a false or misleading statement, you might face an administrative penalty of up to 75% of the deficit. If you missed out on $10,000 in super, that’s an extra $7,500 on top of the superannuation (don’t forget the interest).
Furthermore, failure to produce a necessary Superannuation Guarantee Charge (SGC) statement carries a maximum penalty of 200 per cent of the SGC! Using the above scenario, suppose you just disregarded it, and the ATO performed an audit, during which they discovered the $10,000 non-payment. They have the authority to punish you with $20,000 only for failing to cooperate. That’s a pricey fee that we’re sure you’d rather avoid at all costs! As intended, the substantial fines and penalties might be sufficient motivation to ensure you meet your superannuation requirements.
- Director Specific Obligation– Being a company’s nominated director entails a great deal of responsibility in terms of super duties. If you are a corporate director, it is your ultimate obligation to pay Superannuation Guarantee on time. Failure to comply in full and on time may result in the ATO issuing a Director Penalty Notice (DPN) to you personally. This defeats your company umbrella protection and exposes you to personal liability for unpaid super, interest, and penalties.