Employers failing to pay proper Superannuation Guarantee (SG) isn’t new. One example is Bunnings, a large company which recently made an admission that it failed to pay the correct SG for almost a decade simply because of a payroll error. The 2011 change in Bunnings’ enterprise agreement introduced requirements for super to be calculated on workers overtime hours. With that, the payroll error occurred.
Another big business that recently fell behind on its super payments is EY. The company failed to pay their SG by more than six months for some workers when they switched super accounts and the Australian Federal Police have short paid their staff superannuation by $22 million.
What to do if you discover a client has underpaid SG
The first step is to self-report to the ATO – even if you do not yet know the exact amount of super short paid. The reason is due to the penalty remission process.
The ATO recently released PS LA 2019/D1, an internal document which contains guidelines in relation to the remission of additional super guarantee charges imposed under Part 7 of the Superannuation Guarantee (Administration) Act 1992. Once finalised, it will take the place of the existing PS LA 2011/28, which provided a very general guide in terms of knowing whether a case deserved remission of penalties. On the other hand, PS LA 2019/D1 offers more specific guidance.
Where an employer does not provide the minimum level of super, the employer is liable to pay a tax, the Superannuation Guarantee Charge (SGC). It is collected from employers and is distributed primarily to the super interests of employees. To deter employers from failing to report their SGC liability by set due dates, the SG regime provides for penalties.
Find out more about the guidelines regarding remission of additional super guarantee charges from Effective PD’s webinar. Subscribe to Effective PD’s webinar. Visit www.effectivepd.com.au. Effective PD offers an innovative way for busy accountants to be on top of their game with continuing professional development in a brief, flexible and easy way.
