A common and honest mistake that many small business employers make is to pay quarterly employee superannuation late. Although the due dates are 28 days from the end of the quarter (28th January for the December quarter, for example), what many don’t realise is that the payment must reach the employees fund by the due date. Note that some funds require employers to pay monthly rather than quarterly.
Before providing more information about why Maple recommends paying 15 days after the end of the quarter, it’s important to go through a quick superannuation history lesson.
SuperStream came into effect for small businesses in 2015 with the aim of making super payments easier and more efficient. Before SuperStream, most small employers had the arduous task of paying the quarterly super of each employee one at a time across numerous super funds. SuperStream is now compulsory for all employers and allows the payments to be transmitted electronically. The electronic payments are made via a super clearing house.
A Superannuation Clearing House is a one stop shop that allows employers to make super payments to multiple funds in a single transaction. Employers must choose one. There are many clearing houses available. However, most chose either the clearing house available through their accounting software or the free Small Business Superannuation Clearing House (SBSCH). All of Maple’s clients use Xero cloud accounting and the clearing house that comes with it. They all agree that paying super each quarter is easy, fast and accurate. Here is a short video about paying super using Xero.
The SBSCH is simple to use and available at no charge to small businesses with 19 or fewer employees or an annual turnover of less than $10 million. Although the SBSCH is slightly more time consuming than cloud accounting clearing houses, the time difference is marginal. When using the SBSCH, it’s important to take care when entering the dollar amounts. This is to ensure that the correct amounts are transferred to employee super funds.
Why pay 15 days after the end of the quarter? Factors such as the type of clearing house, public holidays and system outages can delay the transfer of money from your account to employee super accounts. For example, Xero says that “it can take up to five business days for your payment batch to reach your employees’ super funds.” Xero also suggests “submitting your contribution batches up to two weeks before the due date.” For more information, see Xero’s instructions on processing super payments.
The ATO’s Small Business Super Clearing House webpage states that “employers will have met their obligations under the Superannuation Guarantee Administration Act 1992 if the payment has been made by the due date and the payment has been accepted by both the SBSCH and the relevant fund.” Although this suggests that those who use the SBSCH will be able to safely make their super payments much later than 15th, there are two reasons why it’s better to be safe than sorry.
- Employers will not be able to claim a tax deduction for super payments that do not reach the super fund by the due date. Depending on the total amount of late super payments, this can have quite a significant affect on your tax bill. See this ATO webpage for more information.
- If you don’t pay an employee’s super on time, you are liable for the super guarantee charge (SGC), even if you make the payment later. See the ATO’s Late Payments page. Trust us that you don’t want to go through the SGC process.
You may or may not know that the ATO grants small businesses an extension on their December quarter Business Activity Statement (BAS). Instead of having to lodge and pay by 28th January, most small businesses are not required to lodge and pay the December quarter BAS until 28th February. Unfortunately, some business owners pay December quarter super late because they assume that the BAS extension also applies to super guarantee payments. December quarter super payments are definitely due to reach the funds by 28th January.
We hope that you’ve found this information useful. Why not add a recurring reminder on your calendar for the 15th October, 15th January, 15th April and 15th July?
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