Not meeting super obligations can be an expensive mistake
Small business owners who try to avoid their employee superannuation obligations can now be reported to the Fair Work Ombudsman.
Formerly the ATO was charged with enforcing employer’s super obligations. But due to the ATO’s workload, the chance of an errant employer being forced to meet their Superannuation Guarantee Contribution obligations was slim.
The reason why the Fair Work Ombudsman is involved with an employer’s SGC obligations is due to almost every modern award including this condition: “an employer must make such superannuation contributions to a superannuation fund for the benefit of an employee as will avoid the employer being required to pay the superannuation guarantee charge under the superannuation legislation with respect to that employee”.
Under the regulations an employer must pay quarterly super contributions for employees by no later than the 28th day of the month following every quarter. When this deadline is not met employers pay a non-deductible SGC amount equal to the superannuation contribution, an interest penalty of 10% a year and an administration fee of $20 for each employee affected.
A further penalty awaits employers that allow employees to make voluntary contributions to superannuation after tax. In addition to the requirement to meet their SGC obligations, paying quarterly superannuation by the due date, employers must also pay the employee voluntary after tax super contributions monthly. This means an employer can be in breach of two award conditions if they are not careful.
Although Work Fair inspectors are more interested in helping correct an employer’s mistakes, where an employer shows a completely disregards the award conditions will be fined. Penalties of up to $6600 for an individual and $33,000 for a corporation may apply to a breach of a term of a modern award or the National Employment Standards.
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