There has been some confusion regarding Super Guarantee (SG) rates due to the constant changes by government. It is important that businesses ensure they are paying the correct amount of SG as the penalties for paying too little are significant. We have summarised the key points below.
- The SG rate for the 2015 financial year is 9.5%
- This rate will stay the same until 2021/22 at which time it will start to increase by 0.5% per year until it reaches 12% in 2025/26.
- SG MUST be paid on time – that is, 28 days after the end of the quarter. For example, if you paid wages in May the SG would be due by 28 July. However, you can pay your super more often than quarterly if you choose.
- If you don’t pay your super on time, you are required to pay the SG, plus interest of 10% as well as an administration cost to the ATO. The ATO will then remit the super to the employees fund.
However, by far the greatest penalty is the loss of the tax deduction.
If, for example, you had not paid your September 2014 SG by 28th October and your liability was $8,000 you would miss out on the deduction. For someone paying tax at the highest marginal rate of 49% this equates to an effective penalty of $3,920….plus the 10% interest and the ATO penalty.
- When paying your super you need to make sure the fund receives is by the 28th so paying by BPay on the 28th won’t be effective, you need to make the payment a few days before.
If you have any concerns about paying your SG please contact our office.