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Superannuation: Super sting for falling behind

Every Issue

Cite as: December 2011 85(12) LIJ, p.78

It may be time to brush up on requirements for employers.

As an employer, falling behind on your superannuation obligations can be costly. Heavy financial penalties apply for some breaches and falling behind on changes to administration systems and processes can end up costing in terms of your firm’s time and resources.

Employers are required to pay super contributions for virtually all employees, with a small number of exceptions such as employees paid less than $450 per month, employees under 18 working less than 30 hours per week, and employees aged 70 years or more.

Employers must pay a minimum of 9 per cent of each eligible employee’s ordinary time earnings. These amounts must be paid at least four times a year into a fund nominated by the employee or where an employee does not nominate a fund, the default super fund nominated by the employer, within 28 days of the end of each quarter.

Quarter beginning

Quarter ending

Lodgement date

1 January

31 March

by 28 April

1 April

30 June

by 28 July

1 July

30 September

by 28 October

1 October

31 December

by 28 January

Non-complying employers must lodge a statement with the Australian Taxation Office and pay a penalty known as the superannuation guarantee charge (SGC). This charge is equal to the amount of the required contribution, plus interest at 10 per cent on the amount outstanding plus an administration charge of $20 per employee.

Another sting from not meeting your obligations is that the SGC is not a tax-deductible business expense, unlike employer super contributions that are paid on time. Employers can also face penalties for paying contributions into a fund other than that chosen by their employee, or for failing to give their employees a choice of funds when they start work.

Electronic payments

The federal government is keen to streamline the back-office of the super industry to reduce inefficiencies and lower fees for members. The proposal is known as “SuperStream”. One key initiative is a requirement for all employers to pay contributions electronically, such as by electronic funds transfer, and to also submit data electronically.

Contributions on payslips

The federal government has announced its intention for employers to include on staff payslips the amount paid into super during the pay period. While the change is yet to pass into legislation, employers would be well advised to start planning for the consequences of this change in payment and reporting systems.

Medicare clearing house

Many employers are unaware the Australian government has established a free superannuation clearing house service for businesses with fewer than 20 employees. In theory a business with 20 employees could be paying in to as many as 20 different super funds. Operated by Medicare, the clearing house service means an employer can remit a single payment to the clearing house which then forwards the total payment to the individual super funds. The service can be a real benefit to small business by reducing red tape and costs of complying with its superannuation guarantee obligations.

Workplace visit

Many employers don’t realise they can ask their default superannuation fund to visit the workplace to deliver member education and provide advice and assistance to employees. Arranging for a default fund to visit a workplace will advance staff understanding of super and the different options available. It also removes the burden from your staff. Remember – if your super fund is not interested in visiting your workplace, legalsuper will.

ANDREW PROEBSTL is chief executive of legalsuper, Australia’s industry super fund for the legal profession. He can be contacted on ph 9607 9430 or via


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