Super Guarantee
If there is one part of compliance in your business you must get right is paying the correct amount of your employees’ super on time and at the right amount.
With the introduction of Single Touch Payroll (STP), the tax office has more visibility into your records. This means the ATO can see if you have paid your super on time and in the correct amount. The ATO has sophisticated data matching now that can link organisations with your records. It’s important to be aware of this fact, and to uphold your responsibilities to super as a business owner. There are heavy penalties for failing to pay your employees’ super on time.
Here’s how to remain compliant with your superannuation obligations:
Check each of your employee records for the following:
The employee’s super fund of choice is entered into their record, together with the employee’s member number.
The rate of super is entered correctly at 9.5% of Ordinary Time Earnings (OTE).
Click this link to find a checklist on what Ordinary Time Earnings means: https://www.ato.gov.au/Business/Super-for-employers/How-much-to-pay/Checklist--salary-or-wages-and-ordinary-time-earnings
The balance of the super account in the Profit & Loss Statement is the amount of deduction you are receiving in your current year’s tax return, i.e., total amount of super paid. The balance of the super account shown as a liability in the Balance Sheet is the amount of super owing, i.e., the amount to be paid to the employees’ super fund. This amount accumulates each pay day and is the amount you pay on the 28th of the month following the end of the quarter.
To receive a tax deduction, the payment amount must be received by the super fund no later than 28th of the month following the end of the reporting quarter. This means submitting your super a few days earlier than this date to allow for processing.
Paying near enough is not good enough. The amount of payment must be exactly the amount you have reported through STP. Paying your super through your accounting software will minimise these errors. If your payment is one cent out, the payment will be rejected. If the rejection falls after the payment date (it normally does because the tax office takes time in processing), you will lose your tax deduction, .
Remember super funds report payments received to the ATO.
Contact us to do a complete review of your payroll to ensure your super is correct.