On 1 July this year we saw the introduction of Single Touch Payroll (STP). STP delivers to the ATO live information about payroll transactions. This enables them to cross match with other authorities and in due course we will see other agencies accessing this as well (eg Centrelink). Information that is reported to the ATO each pay cycle includes employer superannuation contributions.
In addition, all employer superannuation contributions now must be processed through Superstream, a system that reports back to the ATO when a contribution is received. So it is now easy for the ATO to match reported superannuation contributions from payroll information with the superannuation payments that have been made.
Compulsory employer contributions are required to be remitted to each employee’s superannuation fund before the 28th day following the end of each quarter. Failure to do this means that you become liable to the Superannuation Guarantee Charge (SGC) – this involves additional administration, time, cost and reduced tax deductions. So avoiding the SGC is a high priority.
However, there are many factors at play and some are beyond the employer’s control. The funds are required to be received by the superannuation fund by the due date and the time taken to process the payment through a clearing house varies.
For this and cash flow management reasons, we encourage our clients to pay all superannuation contributions on a monthly basis as soon as possible after the close of the month. By adopting this practice you will always be on top of your superannuation obligations and will never need to worry about the SGC.
If you would like to discuss this further, please contact the partner or manager who looks after your affairs.