The government has passed legislation through parliament that gives the Australian Taxation Office (ATO) the power to enforce up to 12 months jail time or hefty fines for directors of companies that do not to pay their employee superannuation entitlements.
With the introduction of Single Touch Payroll from 1 July, the ATO will have up to date information on how much super employers owe to their workers.
Former Superannuation Guarantee Charge Obligations (pre 1 April 2019)
- Employers who did not meet their superannuation payments by quarterly due date were required to lodge a Superannuation Guarantee Charge (SGC) Statement with the ATO within three (3) months of their due date
- If an employer failed to comply with their SGC obligations, it could result in financial penalties, the directors facing personal liability under an ATO director penalty noticeor a winding up notice being issued to the company.
New Superannuation Guarantee Charge Obligations (from 1 April 2019)
The New Bill which applies retrospectively from the SGC Quarter ended 30 June 2018 outlines:
- Superannuation amounts must be reported by their due date i.e. within 28 days of the end of each quarter to avoid personal liability of directors
- The ATO can give a direction by written notice to a company, requiring it to pay an amount of outstanding SGC, or an estimate of SGC, within 21 days.
- The ATO can then apply to court for prosecution of the offence. The result of this may be a fine of up to $10,500, imprisonment for 12 months, or both.
What do you need to do if you have a Superannuation debt you cannot pay?
Becoming personally liable for your company’s SGC debt is serious business. Imagine facing jail time or being hit with large penalties. For this reason, SGC should be the first debt you pay, not the last.
- Ensure you accurately calculate and pay your superannuation liability to employees’ super funds each quarter.
- If you cannot pay your superannuation for a quarter, lodge an SGC Statement by the due date.
- When you lodge your statement, propose a payment plan to the ATO to reduce the debt. It is preferable to pay the debt before the next quarter is due.
If you feel you are in over your head in SGC debt or have any questions in relation to your Superannuation Guarantee Charge Obligations, please don’t hesitate to contact us. We are here to help.