One of the most critical aspects of payroll management is ensuring compliance with Superannuation Guarantee obligations. This involves making regular superannuation contributions on behalf of your employees and ensuring that these contributions are made on time and to the correct superannuation fund.
As a CEO, it is your responsibility to ensure that your business meets it’s superannuation obligations. Failure to meet these obligations can result in significant risks and penalties.
These risks include:
- Australian Taxation Office (ATO) Audit: No one wants to be audited by the ATO! Employers who are not compliant may be subject to an ATO audit. This can result in considerable time and resources being diverted from your business to respond to the audit and rectify any non-compliance issues. These audits may also reveal other non-compliance issues that you will need to promptly address.
- Penalties and Interest Charges: Employers who fail to meet their quarterly superannuation obligations on time are subject to penalties and interest charges from the ATO. Basically, if you do not pay an employee’s minimum superannuation guarantee amount on time and to the right fund, you must pay the superannuation guarantee charge (SGC). You must also lodge an SGC statement to the ATO. Overall, the penalties can be significant, with a penalty being much more that the amount of the unpaid superannuation guarantee, as high interest charges and fees are also applied and it is not tax deductible. You can read more about this charge on the ATO website.
- Legal Action: Employees who feel that their employer has not met their superannuation obligations can take legal action against them. This can result in significant legal costs and damage to the employer’s reputation. The ATO also prioritise the collection of SGC debts so may take stronger action which can include additional penalties.
- Employee Disengagement: Failure to meet your superannuation guarantee obligations can result in employee disengagement and lower morale. Employees who feel that their employer is not meeting their obligations may become less committed to their work, resulting in lower productivity and increased staff turnover.
Here are four tips to help you ensure compliance with regards to your superannuation obligations:
- Keep accurate payroll records: It is essential to keep accurate records of your employees’ superannuation contributions and ensure that they are correctly calculated and paid.
- Stay up to date with changes in legislation: Superannuation laws and regulations are subject to change, so it is important to stay up to date with any changes that may affect your superannuation obligations. This can help you to ensure that you are meeting your obligations correctly and avoid any penalties or risks associated with non-compliance.
- Use reliable payroll software: Using reliable payroll software can help to streamline your payroll processes and ensure compliance. Make sure that your software is up to date and can handle the complexities of superannuation calculations and payments.
- Seek professional advice: If you are unsure about your superannuation obligations or have questions about how to meet them correctly, seek professional advice. This can help you reduce risks or penalties associated with non-compliance.
Don’t get caught out! Failure to comply with the Superannuation Guarantee can have severe and costly consequences to your organisation.
At Payroll Experts Australia, we offer a Payroll Processing Audit designed to help businesses identify potential areas of risk in their payroll processing systems. Our team will review your current payroll processes and provide recommendations on how to improve internal controls and increase compliance with current laws and regulations.
Businesses can email firstname.lastname@example.org or call 1300 287 213 for free first-step advice on how to ensure your payroll processes can safeguard your payroll compliance. Follow us on LinkedIn or sign up here to receive our articles direct to your email inbox.