Under superannuation guarantee legislation, employers must pay superannuation contributions to their employees. The contributions are paid directly to each employees nominated super fund. The amount paid is set at a percentage of each eligible employee’s Ordinary Time Earnings (OTE). The Australian Government determines the Super Guarantee rate which, in 2022/23, is set at 10.5% of OTE. The contributions are paid to an individual over the age or 18 or under the age of 18 but working 30 hours per week. As an employer you are required by law to make these payments.
It is vital as an employer you keep detailed records of information. This not only ensures you remain compliant and meet the legal requirements, but also assist in entering the correct information. When external data is matched with your own it will eliminate any discrepancies that may arise. Data matching safeguards businesses by facilitating that the correct information is published. These protocols ensure as an employer, you comply with their tax and super tax obligations.
The implementation of Single Touch Payroll (STP) means the ATO now match payroll data from employers against superannuation contributions made to super funds, any discrepancy can instigate an ATO review of audit.
Using the ATO Clearing House
The ATO clearing house is a free and online service provided by the Australian Government. This service is used through the Australian Taxation Office to pay super for all your employees through a single payment. Once the contributions have been made, the clearing house will distribute the money to each employees elected fund. The ATO has made note that by accessing the clearing house you have the ability to:
- Nominate a regular amount for each employee or change the amount when you make a payment.
- Meet your super guarantee (SG) obligations when your payment and instructions are accepted by the clearing house by following the clearing house terms and conditions.
- Pay online to meet SuperStream requirements.
- See records of your past super contributions.
If you are using the Clearing house for the first time you must register. For instructions and detailed information visit https://bit.ly/3YmnhOB
Paying on Time
It is important to pay your employees super contributions on time to avoid penalties. It is required by law to pay at least four times a year, at the end of each financial quarter. As an employer you also have the option to pay more frequently. If you miss a payment by the deadline you are required to report this to the ATO and pay a Super Guarantee Charge. The laws are strict, with penalties often being significant. The below table shows Superannuation guarantee payment dates.
Increased Audit Activity
As a business, you are at risk of an audit if you do not pay your employees super contributions on time. There has been a large increase in audit activity with relation to late payment of employees super. This has seen a spike in audits because data matching is so easily accessible to the ATO now. With superfunds now reporting their receipts to the ATO and payroll being reported by STP any lodgments that do not meet legal obligations are risking of being flagged by the ATO.