Why you should always pay your super guarantee
Under Australian Legislation employees are entitled to 9.5% Superannuation Guarantee payment on top of their gross wage.
It is compulsory for every employer to pay their employees Superannuation Guarantee which has to be paid into the employees nominated superfund every quarter, by the due date.
⚠️ The due date for payment is always 28 days after the end of the quarter.
So why is paying your employee’s super guarantee on time so important?
If you don’t pay your super guarantee by the due date then you will be up for a super guarantee charge.
The SG charge includes:
▫️The SG you were supposed to pay
▫️Interest of 10%
▫️And an Administration Fee
To pay the super guarantee charge you need to complete a SC charge statement and submit it too the ATO.
🚫 And the worst part of all is that once now none of it is tax deductible!
That means that the superannuation that would usually have been a tax deduction for your business now cannot be claimed as a deduction.
How do I Avoid the Super guarantee Charge?
The best way to avoid this happening is to pay your superannuation before the due dates using Automated Payments.
✅ We can set this up for you in your accounting software to be paid on a weekly, monthly or quarterly basis.
So you will never have to worry about missing a due date again!!
Should I be paying myself Super Guarantee?
As a rule of thumb if you are paying yourself a wage, then you should also be paying yourself Superannuation Guarantee, even though you are the owner of your business.
If you are running your business through a company structure and you are receiving a wage, then you have a legal obligation to pay yourself super.
If, on the other hand, you are just operating as a sole trader or through a partnership you don’t have this legal requirement. Although you still should be attempting to pay yourself super by factoring this expense into your budget as a means of saving for your retirement!
When your self employed no-one is topping up the super piggybank for you so you need to be conscious of this when running your business. You will be retired for well over 20 years so consistanlty paying yourself super can will be very beneficial in the long run.
If you are making your super payments voluntarily, you can claim a tax deduction for amounts up to $25,000 (concessional contribution cap) in your tax return which reduces your taxable income. Just remember to fill in a ‘Notice of intent to Claim’ form with your superfund before the end of the financial year.
Don’t be too concerned if your business does not have the budget to factor in a voluntary super payment. Focus on building your business first, but keep your retirement in mind so that once you have grown to a size that can support a super payment you will know this is best practice!