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What Happens If You Don't Pay Superannuation on Time? - What to Know

Accounting can be a complicated financial task for many businesses. One of the things you should pay attention to in accounting for an e-commerce business is superannuation.

Superannuation, or simply called super, is the payment earned by Australian employees for their retirement. It is money they can use as funds or a regular income when they retire.

Generally, all companies and organisations should pay employees superannuation since it is required by the law. This assurance is called super guarantee, and employers who pay their employees’ supers late shall be liable for the super guarantee charge (SGC).

There are many processes involved in settling late super payments, but before diving into that, it’s best first to understand how superannuation works for employers.

Superannuation for employers

In general, an employer who pays its employees wages before tax starting at $450 is required by the law to pay the employer super on top of their monthly income.

The minimum amount the employer has to pay is called the super guarantee (SG). The SG is equivalent to 9.5 per cent of the employee’s stated salary in the contract. If the employee earns $450 a month, the employer will only need to pay the SG relative to the employee’s ordinary time earnings regardless of any holiday or overtime pay.

Employers pay super to a compliant super fund, which most employees have the option to choose.

SG is paid at least four times a year. There are quarterly due dates set, and if the payment exceeds those dates, it’s considered as late fulfilment of the super.

Offsetting late payments

Any late payment should be settled through the payment of the SGC. However, the employer has two options to offset their late payment fees:

An employer can use the late payment offset to reduce the total SGC amount, or

an employer can carry the late payment forward. This way, the employer can use this as a pre-payment for a future superannuation contribution.

Additional penalties that may be imposed

If an employer fails to meet the SG obligations, the Australian Taxation Office may impose additional penalties such as:

  • Choice liability – a penalty to employers for not giving employees the right to choose their super fund.

  • Director penalties – imposed towards the organisation’s director for failing to pay the SGC in full by the due date. In short, the director shall be personally liable for settling the unpaid amount.

  • Other penalties – imposed for general interest charges, administrative penalty, failure to keep records, failure to provide an SGC statement when required, failure to pass on a TFN, and entering into arrangements to avoid super obligations.

The effect on e-commerce businesses

Australian e-commerce businesses are also liable to pay for employee’s super on time. Because e-commerce businesses have to put more effort into the online aspects of their operations, sometimes liabilities are often overlooked, and in turn, they have to pay more for amendments for issues that could have been avoided.

That is where e-commerce accounting services become significantly useful. Paying superannuation is part of your responsibilities as an employer, so must comply with the rules. Hiring an e-commerce accountant can provide your online store more flexibility and lesser worries about late payments and other liabilities.

We offer Shopify accounting and bookkeeping services. If you’re in need of an accountant to manage your superannuation fees, get in touch with us today. We’re happy to help.

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