02 Sep No BS – The ATO is Getting Tough on Directors
We Know You’re Busy so Here’s the Short Story Because This is Important
We have noticed a marked increase in the ATO’s audit activity of employer super obligations and some of our clients have been stung with excessive interest charges (we feel quite unfairly at times). The government has also changed the personal liability regime for Directors so this is something all employers should understand.
The short story is:
- If you do not pay your Superannuation Guarantee on time, even if it’s only a day late, you will be personally liable for the underlying payment along with any penalties and interest (Short story remember so CLICK HERE to read more on the Director Penalty Notices). This is where 1 day late super payments start to get scary.
- The penalties and interest apply even if you are a day late paying AND you have not lodged a Superannuation Guarantee Charge Statement.
- Penalties can include criminal charges and even jail time.
- Single Touch Payroll gives the ATO better electronic data matching tools and they can now automatically compare your employee’s super fund data against your obligations.
- STP tips the odds firmly in favour of the ATO. It is more likely than ever employers who do not pay their super liabilities will be identified and audited.
- At the moment interest is charged at 10%, that’s pretty high considering the official cash rate is only 1.0% but for a day late how much can that really be? But here is the real problem paying super late, even a single day late!
- And remember, the super payment must be received by your super fund on or before the due date. If your bank takes 3 days to get your payment through the system then you will need to ensure you make the payment 3 or more days before the actual due date.
Interest is Charged from the Due Date until the Date a Superannuation Charge Statement is Lodged and Paid.
This means that even if you are a single day late paying your super liabilities, interest will be charged at 10% until you lodge a Superannuation Guarantee Charge Statement – not just until you pay the liability.
On a $300,000 payroll, the super liability will be around $28,500 or $7,125 per quarter. Pay any of those payments late and the interest you will be charged if you are audited, which is more likely than not with STP, will be $712 a year on each quarter. Most Super Audits don’t take place immediately so 2 years after the late payment so the interest charge to you for that late payment will be around $1,400.
If all your super payments were just a single day late, during that 2 years the total interest you will be charged is around $6,400.
The Short Story Summarised
Running a business and managing cashflow can be difficult and it is reasonable to prioritise those business costs that are most critical to your business survival. At times GST, PAYG, and Superannuation can be viewed as lower priority costs. If you are ever contemplating not paying your super guarantee obligation on time then you will become personally liable for any resultant shortfall, interest, and administration penalties.
If you do pay your super liabilities late, even by a single day, you MUST lodge a Super Guarantee Charge Statement to limit the interest you will be personally liable to pay.
As a final word of warning, remember all super payments have to be received by the employee’s super fund on or before the due date so be aware how long your bank takes to process payments and make sure you schedule your payment accordingly.
For more information please give us a call (07) 54489600 or CLICK HERE to drop us a message.