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Alert: Superannuation and tax deductions ….

Superannuation can only be claimed once you have PAID it. Its quite misleading when you have an accounting package like Xero, Quickbooks or MYOB that shows the superannuation expense on the profit and loss – as realistically when your tax is prepared your tax agent will adjust your profits according to how much and when you paid your superannuation due for your staff.

In fact when it comes to paying your staff’s superannuation you MUST pay it on time.

Due dates for Superannuation are officially quarterly – so due dates are organized like this:

Quarter 1: !st July – 30th September – Superannuation is due by 28th October – BPAY BY 25th!

Quarter 2: 1st October – 31st December – Superannuation is due by 28th January – BPAY BY 25th!

Quarter 3: 1st January – 31st March – Superannuation is due by 28th April – BPAY BY 25th!

Quarter 4: 1st April – 30th June – Superannuation is due by 28th July – BPAY BY 25th! – NOTE: if you pay your 4th Quarter by around the 15th of June (up to around the 23rd the very latest) you can get a tax deduction for this payment in the current year which is handy for reducing tax liability.

NOTE: all payments made to the superannuation clearing houses are made by BPAY – and this takes 3 days. If you BPAY on the 28th of the month it will be DEEMED LATE.

What happens if you are late paying your employees superannuation?

The honest answer is – its bad. Let me count thy ways …

  1. You will not get a tax deduction for the payment when you finally make that payment.
  2. The late monies are calculated on a quarterly basis. – You have to pay an admin fee of $20 per employee in the quarter you paid late.
  3. You will pay interest on the monies outstanding – calculated by the ATO.
  4. You can find yourself being asked to pay a fine of up to 300% of whatever you paid late (eg BPAY’d on the 28th of the month) or failed to pay. – And none of it tax deductible.

If you find yourself in a position where you simply cannot pay your staff’s super on time – you can submit a superannuation surcharge form that will alert the ATO to the situation and set up an account on the ATO portal for the amount outstanding. It will add the administration fees and interest to the amount not paid. ATO staff have suggested this is the best way to avoid the 300% fines being allocated to your account.

The lesson here really is: pay your staff correctly, pay your Superannuation obligations on time. If you want to increase the tax deductibility of your super for 2022 then pay that 4th quarter as early as you can. if you have questions – talk to your tax agent. Happy new financial year!!!!