Superannuation audit by the ATO?
If you are under a superannuation audit by the Austra lian Tax Office (ATO), you should contact King Lawyers immediately for legal advice and representation. This will ensure that you get the best possible result for your superannuation audit and minimise the penalties by the ATO.
You should get legal advice from a tax lawyer even if you have an accountant or tax agent. Your accountant or tax agent cannot give you legal advice on your superannuation audit.
What is the Superannuation Guarantee (SG)?
In Australia, employers are legally required to make superannuation contributions on behalf of their qualifying employees to a complying super fund. This is formally referred to as the Superannuation Guarantee.
The Superannuation Guarantee is imposed by the Superannuation Guarantee (Administration) Act 1992 (Cth). The superannuation law started operating in Australia from 1 July 1992.
The superannuation system is administered by the ATO.
When does your employer need to pay you superannuation?
Generally, an employer is required to pay superannuation for permanent and casual employees when they are:
- At least 18 years old or under 18 and working at least 30 hours per week; and
- Earning at least $450 per month (before tax).
How much super does your employer need to pay?
The current Superannuation Guarantee contribution rate is 9.5% of an employee’s ordinary time earnings.
The superannuation rate will progressively increase in the future and will reach 12% in 2025-26. The rate will increase as follows:
- 2018-19: 9.5%
- 2019‑20: 9.5%
- 2020-21: 9.5%
- 2021‑22: 10.0%
- 2022‑23: 10.5%
- 2023-24: 11%
- 2024-25: 11.5%
- 2025-26: 12%
Ordinary time earnings include an employee’s normal hours of work plus any of the following potential entitlements:
- shift loading
- leave loading
- termination payments made in lieu of notice
- back pay
However, ordinary time earnings do not include overtime payments.
When does your employer need to make superannuation payments to your super fund?
Superannuation Guarantee contributions must be made quarterly by the following due dates:
- For quarter 1 (1 July – 30 September), the due date is 28 October
- For quarter 2 (1 October – 31 December), the due date is 28 January
- For quarter 3 (1 January – 31 March), the due date is 28 April
- For quarter 4 (1 April – 30 June), the due date is 28 July
There are heavy penalties under the law for failing to meet your superannuation obligations on time.
What is a superannuation audit by the ATO?
The ATO has the legal power to audit the superannuation affairs of employers to ensure that they have correctly complied with their super obligations under the law.
If you are under a superannuation audit, you should get legal advice from an experienced tax lawyer before you respond to the ATO.
What is the Superannuation Guarantee Charge (SGC)?
If an employer fails to pay the minimum amount of superannuation on time and to the correct super fund, they may have to lodge a Superannuation Guarantee Charge statement and pay the Superannuation Guarantee Charge to the ATO.
The Superannuation Guarantee Charge is made up of:
- Superannuation Guarantee shortfall amounts (calculated on the employee’s salary or wages)
- Interest on those amounts (currently 10%)
- An administration fee of $20 per employee, per quarter
When do you need to pay the Superannuation Guarantee Charge to the ATO?
You must lodge your SGC statement and pay the Superannuation Guarantee Charge to the ATO by the following due dates:
- For quarter 1 (1 July – 30 September), the due date is 28 November
- For quarter 2 (1 October – 31 December), the due date is 28 February
- For quarter 3 (1 January – 31 March), the due date is 28 May
- For quarter 4 (1 April – 30 June), the due date is 28 August
There are heavy penalties under the law for failing to meet those deadlines.
Late payment offset for superannuation payments
If you pay your superannuation contribution late, you may be able to use the late payment to either offset the SGC payable to the ATO or carry it forward as a prepayment of a future contribution for the same employee.
Claiming a tax deduction for superannuation payments
You can claim a tax deduction for the Superannuation Guarantee payments you make for employees under 75 years old by the due date. Super payments are tax deductible in the financial year you pay them.
However, you cannot claim a tax deduction for the Superannuation Guarantee Charge that you pay to the ATO.
Penalties by the ATO after a superannuation audit
Once the ATO has completed a superannuation audit, the ATO can impose heavy penalties under the law for your failure to meet your superannuation obligations on time. The ATO’s penalties may include:
- Director penalties (the director of a company that fails to meet an SGC liability in full by the due date automatically becomes personally liable for a penalty equal to the unpaid amount)
- Administrative penalties (this can be up to 75% of the shortfall)
- Penalties for failing to keep records(this can be up to 30 penalty units)
- Penalties for failing to provide an SGC statement when required(this can be up to 200% of the amount of the charge payable)
- Penalties for failing to pass on an employee’s TFN to their super fund(this can be up to 10 penalty units for each offence)
- Penalties for entering into arrangements to avoid your superannuation obligations(this is at the ATO’s discretion and is calculated as a percentage of the shortfall)
Legal advice from an expert tax lawyer for your superannuation audit by the ATO
This content of this article is offered as general information only and should not be relied on as specific legal advice.
To get legal advice from King Lawyers on your specific circumstances, please contact us to arrange an initial consultation with our experienced tax lawyers.