Here’s a guide to what the super guarantee charge is and when employers will have to pay it.
What is the super guarantee charge?
The super guarantee charge applies if an employer doesn’t pay an employee’s super guarantee on time and to the correct fund. The charge is paid to the Australian Taxation Office (ATO) and it is not tax-deductible.
The super guarantee (SG) is the minimum amount that employers have to pay into eligible employees’ super accounts. It is currently 10% of an employee’s ordinary time earnings (what they earn for their normal hours of work), having risen from 9.5% on 1 July, 2021.
How much is the super guarantee charge?
The super guarantee charge, or SGC, is made up of three parts, the ATO says:
- The employee’s “SG shortfall amount”:
- This is calculated based on their full salary or wages for the quarter (including overtime pay if applicable), not just their ordinary time earnings, so it may end up being more than the SG they would have received had their employer paid it on time.
- This amount also includes any “choice liability”, which is a penalty of up to $500 per employee, per quarter for not giving the employee a choice of super fund or for not paying their super into the fund of their choice.
- Nominal interest on this full SG shortfall amount (currently 10% per annum), which accrues from the start of the relevant quarter and is compounded daily.
- An administration fee (currently $20 per employee, per quarter).
Once the charge is paid, the ATO will transfer the money, excluding the administration fee, to the employee’s chosen super fund.
When do employers have to pay the super guarantee by?
Employers have to pay eligible employees their super guarantee at least four times a year by the due date. According to the ATO, employers have until 28 days after the end of each quarter to make the super guarantee payment for their employees.
| Due dates for super payments | ||
|---|---|---|
| Quarter | Period | Payment due date |
| 1 | 1 July – 30 September | 28 October |
| 2 | 1 October – 31 December | 28 January |
| 3 | 1 January – 31 March | 28 April |
| 4 | 1 April – 30 June | 28 July |
Source: ATO
If an employer doesn’t pay on time and to the correct fund, they may have to pay the super guarantee charge (see above for more details).
If an employer pays the super guarantee late to their employee’s super fund, the ATO says they may be able to use the late payment offset to reduce the amount of the SGC. Alternatively, the ATO says an employer may be able to carry forward the late payment so it is used for a future contribution and is tax-deductible. The ATO notes that the SGC itself is not tax-deductible, however.
When do employers need to pay the super guarantee charge?
The super guarantee charge scheme is generally self-assessed, which means employers must themselves report and correct any missed super contributions. This is done by lodging an ‘SGC statement’ with the ATO by the due date, which is typically one month after the relevant SG payment deadline each quarter.
This means employers need to lodge the SGC statement and pay the charge to the ATO by the following dates:
| Due dates for SGC statement and payment | ||
|---|---|---|
| Quarter | Period | SGC statement and charge due date |
| 1 | 1 July – 30 September | 28 November |
| 2 | 1 October – 31 December | 28 February |
| 3 | 1 January – 31 March | 28 May |
| 4 | 1 April – 30 June | 28 August |
Source: ATO
If an employer doesn’t pay the charge on time, the ATO says a number of additional penalties may apply. For example, if an employer lodges an SGC statement late or fails to provide information when requested as part of an audit, they could face a “Part 7 penalty” of up to 200% of the SGC. There can also be penalties for inadequate record-keeping or for not paying as much SGC as you should.
In addition, if you lodge an SGC statement but do not pay the SGC by the due date, the ATO says the general interest charge (GIC) (currently just over 7%) will apply to the SGC amount until the charge is fully paid. The ATO says the GIC is calculated on a daily compounding basis and is tax-deductible in the year an employer incurs it.
If the employer thinks they will miss the cut-off date for lodging the SGC statement or paying the charge, they can ask the ATO for an extension. Nominal interest will continue to accrue until they lodge. The GIC will then apply to the deferred date until the charge is paid in full.
Employees can also report their employers for unpaid super and the ATO may then investigate. You can report your employer once its due date for paying the SG or lodging the SGC statement has passed and you’ve confirmed the money hasn’t been paid into your super account. You can report your employer directly to the ATO on its website.
What happens if an employer doesn’t pay the super guarantee charge?
If an employer doesn’t pay the super guarantee charge, the ATO says it may take actions such as:
- Giving a direction to pay the super guarantee charge within a specified time period. Failure to comply with the direction is a criminal offence and can result in penalties or imprisonment.
- Issuing a ‘director penalty notice’ which makes a director of a company personally liable for the super guarantee charge amount. The ATO may issue a director penalty notice that allows it to start legal proceedings to recover the amount owed.
- Sending a ‘garnishee notice’ to a person or business who holds money for the employer, such as a financial institution or debtor. This requires them to pay some or all of the employer’s money to the ATO instead.
- Legal action to recover outstanding super debts.
You can use the ATO’s super guarantee charge statement and calculator tool to work out the charge and you can also find the SGC statement for employers on the ATO website.
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