We have recently seen a large increase in ATO audit activity relating to the late payment of employee super (SGC). This doesn’t come as a surprise to us, and we have previously flagged this with our clients. Now that all payroll data must be reported to the ATO via STP (single touch payroll), and the fact superfunds also report receipt of all super contributions to the ATO, obviously this means the ATO can easily match the obligation with the payment and identify any late payments (or non-payments). This applies to related party “mum and dad” employees as well as general arms-length employees. To be perfectly honest I’ve always thought it was unfair to pay employees super late, it’s the employee’s money, not the business’s cash flow, however now I’m saying if you don’t tow the line, expect an audit. Super audits are a pain, you nearly always incur fines and penalties which are not refunded, you incur additional accounting fees, and to top it all off the eventual payment of the super is no longer tax-deductible.
Super needs to be paid by the 28th of the month following the end of the quarter, however, businesses often find it easier to manage cash flow by paying it monthly. Everybody should now be using some sort of automated super system through MYOB or Xero so it’s a quick and easy process to make the payment. Feel free to contact us with any questions in this regard.