Employers Beware: The Importance of Paying Superannuation by the Deadline

In Australia, superannuation is a cornerstone of retirement planning, ensuring that individuals can enjoy a comfortable and financially secure retirement. A large component of the superannuation balances are accumulated via payments to employee funds on their behalf by employers as part of the Superannuation Guarantee on top of ordinary payroll payments.

To maintain the system’s integrity, however, the Australian Taxation Office (ATO) has recently ramped up its efforts to ensure that employers meet their superannuation obligations accurately and promptly, now aided by real-time data from the Single Touch Payroll regime. Additionally, there are plans to introduce “payday super” from 1 July 2026, which further emphasises the importance of establishing good habits and procedures as an employer around payroll and superannuation.

In this article, we will explore the significance of paying superannuation on time, with a focus on the critical aspect of ensuring that super contributions reach employees’ superannuation accounts by the set deadlines. We will also highlight the consequences of non-compliance, including the need to prepare SG (Superannuation Guarantee) forms and the potential for accrued interest charges during audits.

The Significance of Timely Superannuation Payments

1. Financial Security for Employees
   Superannuation contributions are an employee’s lifeline to a comfortable retirement. Regular and timely payments ensure that their retirement nest egg grows steadily, providing financial security when they need it most.
2. Legal Obligations
   Employers are legally required to contribute a percentage of their employees’ earnings into a superannuation fund. Failure to meet these obligations can result in severe penalties and legal action by the ATO, and on occasion, this liability can be attached to the directors of a business.

3. Avoiding Penalties and Interest
   The ATO has increased its audit activity to ensure compliance with superannuation laws. Employers who fail to pay on time can face penalties, including the Superannuation Guarantee Charge (SGC), which includes interest and administrative fees.

4. Reputation and Employee Morale
   Timely superannuation payments also play a role in maintaining a company’s reputation and employee morale. Consistently failing to meet superannuation obligations can harm a company’s image and affect employee trust, which can lead to difficulty in the retention of high-quality staff.

Consequences of Non-Compliance

Employers failing to meet their superannuation obligations not only face penalties but also need to prepare SG (Superannuation Guarantee) forms. These forms are required to rectify any missed, late, or incorrect superannuation contributions. Furthermore, if an employer is audited and needs to prepare these forms, interest may be charged for the entire period from when the contributions were due until they are fully paid, along with an administrative charge per employee. Note that this is the case even if the super was paid – albeit late – however, no form was prepared at the time. This underscores the importance of paying superannuation contributions on time and accurately.

Further to this, it is essential to emphasise that superannuation contributions must reach employees’ superannuation accounts by the set deadlines under the current quarterly system. Therefore, it is not enough to simply pay by the deadlines, payments should be arranged in advance of these dates.

Summary of Quarterly Due Dates:

Here, incorporate a table or list with the relevant dates and include a brief mention of the significance of each deadline in relation to the ‘super guarantee’ and the importance of ’employer super contributions’.

What will Payday Super mean for employers?

Discuss the ‘payday super’ initiative and how it will require a redesign of internal payroll software and processes to properly implement the ‘superannuation rate 2023’ changes.

Seek Expert Advice:

At LDB, our team of dedicated professionals excels in providing expert advice in the fields of Taxation, Superannuation, Business Advisory, and Wealth Management. Whether you’re considering the intricacies of employer super contributions or navigating the superannuation rate changes for 2023, we’re here to assist. Our proactive approach ensures that your business’s affairs are not only compliant with the latest superannuation regulations but also optimised for financial efficiency.

Looking to understand how the upcoming ‘payday super’ system may impact your business? Our SMSF accountants are well-versed in preparing for these transitions, offering strategic insights that can seamlessly integrate with your internal payroll processes.

For a comprehensive superannuation strategy that aligns with your objectives, including SMSF management or utilising a superannuation calculator to forecast your financial future, turn to LDB. We are committed to minimising the risk of negative outcomes upon audit and enhancing your business’s financial health.

Discover how LDB can empower your superannuation compliance and planning. Contact us by phone on (03) 9875 2900 or submit an enquiry through our contact form below to schedule a consultation.