Superannuation….it’s an important cost that needs to be factored into a business’ cashflow when they employ staff. But too often we hear of businesses folding, only to owe their employees their superannuation guarantee (SG) entitlements.
The Association of Superannuation Funds of Australia has recommended that the government provide an additional $10million of funding to conduct SG audits so that in the event of insolvency or bankruptcy, affected employees could receive the maximum possible recovery of these entitlements.
While this recommendation is in relation to businesses that have gone bust, it’s only a matter of time before this net is widened to include all businesses. The ATO’s data matching functionality is ever increasing and it currently receives information from a range of different agencies, including banks, superannuation funds, Centrelink, and businesses themselves (via IAS, BAS and Payment Summary lodgements).
So how can you make sure you are complying with your SG payment obligations? Here’s our best practice guide:
- Factor these payments into your cashflow like you would wages
- Pay SG at the same time you do your wages run – software such as Xero and MYOB now make this a LOT quicker and easier to do – and it is a lot gentler on your cashflow to make smaller regular payments rather than one large lump sum
- If you aren’t able to pay SG each pay run, then ensure that you meet the cut off dates for making quarterly payments. This date is the date it must hit the employee’s super fund – so ensure you leave enough time for it to be processed – most funds recommend 10 business days from payment out of your bank account until it reaches your employee’s fund.
- If you do miss the quarterly cut-off date, did you know that you need to lodge a Superannuation guarantee charge statement and pay interest and an administration fee? Plus you lose the tax deduction you can claim! This can become costly and an additional unnecessary cost to your business – so we strongly recommend making payments by the due date.
If you’d like further information click here or contact our office.