As of 2023, the sugar guarantee (SG) fund is 11% of employees’ ordinary time earnings. It’s an employer’s responsibility to pay the correct super contributions on time and to the right outlets.
As part of the 2022–23 Corporate Plan, the ATO indicated the expansion of STP and activation of phase 2. This update, combined with advancements in its data-matching software, suggests it’s taking a more proactive approach to ensuring businesses meet SG commitments.
The shift in the ATO’s approach to securing SG payments paints a clear picture of non-compliant businesses so they can send the relevant prompts. Read on to learn the ins and outs of how the ATO is stepping up checks, review the consequences of missing payments in the future, and learn the benefits of a more proactive attitude towards SG.
How’s ATO Cracking Down on Super Payments?
The ATO will expand its use of single touch payroll (STP) Phase 2, requiring employers to report the following information on or before payday:
- Income and payment type
- Paid leave
- Director’s fees
- Return to work payments
- Information surrounding the termination of someone’s employment
While Phase 1 was released in the 2019–20 budget, Phase 2 occurred in March 2023. The expansion of STP2 aims to improve visibility over the funds owed to employees’ super guarantee funds.
It’ll also enhance its data-matching capabilities through the Member Account Transaction Service to flag missed payments more easily. It also ensures that lodged funds go to the correct places.
What Is Data-Matching?
Data-matching gathers information from banks, government offices, and other financial institutions, such as payroll systems. The ATO collects figures for business and employee income, tax bills, grants, expenses, health funds, and distributions.
The ATO uses advanced and secure comparison software to highlight discrepancies and status concerning a business’s tax returns. It’s an innovative way to maintain fairness across Australia, ensuring all companies pay what’s due.
Consequences of Missed Super Payments
Businesses must lodge SG payments at least four times yearly, such as quarterly.
If an employer misses a payment, they’ll need to pay a super guarantee charge (SGC), accumulating a larger, non-deductible cost than they would have paid in the first place.
Each SGC comprises a shortfall, a $20 admin charge per employee, and a nominal interest of 10%. The ATO also requires the submission of an SGC statement.
How Does This Update Benefit You?
While following a stricter schedule might be a shock for some businesses, proactive follow-ups can actually prevent entities from incurring hefty interest charges as a result of missed payments.
For many businesses, confusion surrounding SG rules and the correct lodgement dates leads to issues submitting accurate payments.
Similarly, it’ll help business owners foster a greater sense of trust among their teams. Employees feel confident in knowing their retirement funds remain protected.
Are You Worried About Making Super Payments?
At Advisory One, we understand that meeting your financial obligations feels like a full-time job. Remembering key dates, calculating the charges, and lodging correct payments can feel overwhelming.
Did you know our certified accountants can relieve you from those responsibilities, enabling you to focus on other critical business areas? Help is just a phone call away–contact us to get on top of your taxes and contributions today.