Employee Superannuation - The Brave New World
Now hear this. If you ignore your super responsibilities you are going to feel great pain. That is not a maybe; it is a 100% certainty.
This may be the most important five minutes you spend this year. For the purposes of this article, there will be three categories of people.
- Those whose employee super commitments are up to date.
- Those whose employee super commitments are not up to date, but denial overrides any action.
- Those whose employee super commitments are not up to date and are seeking motivation to fix the issue.
If you fall into the first two categories, get on with your day, there is nothing here for you.
The Federal government has made it clear that it will no longer tolerate employers not paying their superannuation. If you think that the future will be like the past, you are very much mistaken. From 1 July 2018 Single Touch Payroll comes into effect for employers with 20 or more employees. For all other employers, it starts 1 July 2019. This means that the ATO and other government agencies will have virtually real-time knowledge of whether super is paid or not. No complaints or tip-offs required.
Here is the current regime if you do not pay on time and it is discovered:
- No tax deduction for superannuation.
- The calculation for super is no longer Ordinary Time Earnings, it is on all remuneration including overtime.
- Interest from the day it is due.
- Administrative penalties.
- Automatic personal liability, no ifs and no buts.
- In general terms, it approximately doubles the cost of super.
It is only a matter of time before the penalty regime is linked to the data from Single Touch Payroll and the process is automated.
The Federal government has concluded that despite the above the message is not getting through. So they introduced legislation that will almost certainly pass the Senate. It has a carrot and a stick. The carrot is that there will be a twelve-month moratorium on penalties paid to the government from 24 May 2018. Here’s the big news – Superannuation Guarantee Charge will be deductible if you voluntarily disclose . The stick is that after that period the penalty will increase to 50% of the total outstanding debt. There are also other penalties including imprisonment for recalcitrant employers.
Employee super is not an option or something to be paid on a discretionary basis. There is an old saying in business that rent and wages are the first things paid and then you look at everything else. The wise will now add employee super to those two items.