No matter how bad cash flow becomes, do not rob your employees of their future by not paying their superannuation.
Super is money put aside by employers along the working life of an employee. Super is designed to ensure the security and financial independence of an employee once they reach retirement.
Though nearly everyone in Australia has a super account, super can be an example of the old phrase “out of sight, out of mind”.
It is for this reason that some cash-strapped employers take the unscrupulous action of paying less, or even none, of the superannuation entitlements of their employees.
As a business owner and employer, this is illegal and unethical. Not paying the minimum amount of super to employees is essentially robbing them of their future.
The ATO takes super payments very seriously.
Currently, the minimum amount of super you need to account for is 9.5% of the employee’s Ordinary Time Earnings (OTE) and payments are due quarterly.
However, get in the habit of paying your employee’s super at the same time you process their payroll (ie weekly). Not only will you stay up to date with payments, but this also helps cash flow.
If you have super obligations which are unpaid, you will need to voluntarily inform the ATO via a Superannuation Guarantee Charge Statement. You will be liable to pay an amount known as the Super Guarantee Charge which is comprised of:
The unpaid super amount (shortfall)
Interest on the shortfall
An administration fee of $20 per employee, per quarter.
The Superannuation Guarantee Amnesty has not yet been passed into law. If passed at a future date it will apply retrospectively to 24 May 2018. Until the amnesty is passed into law, the existing law and penalties apply.
This information is not to be relied upon without speaking to your accountant, tax agent or financial adviser depending on the advice