On 1 July 2021, the minimum compulsory superannuation rate increased from 9.5 per cent to 10 per cent.  There will be further increases of 0.5 per cent each financial year until it reaches 12 per cent from 1 July 2025.

Impact on Cashflow

Directors need to consider and be aware of the impact of the increase in the superannuation rate on their business, including the following:

• Superannuation expense (where employees are paid their superannuation on top of their hourly rate or wage);
• Workcover/Icare premiums (as worker compensation insurance cover is calculated based upon wages plus superannuation); and
• Payroll tax liability (as this is also calculated based upon wages plus superannuation).

Concessional Contributions

In addition to the increase in the superannuation rate on 1 July 2021, there were increases to concessional and non-concessional contributions as detailed below:

• Concessional (before-tax) superannuation contribution cap increased from $25,000 to $27,500

• Non-Concessional (after tax) superannuation contribution cap increased from $100,000 to $110,000

Late Superannuation Payments

Should a company not pay its superannuation liability to the correct fund within the statutory time period, (usually within 28 days of the end of each quarter), the company must lodge a Superannuation Guarantee Charge (SGC) statement with the Australian Taxation Office (ATO) and pay the outstanding SGC to the ATO, together with interest and administration fees.  In addition, SGC is deemed a penalty and therefore, it is not a tax deductable expenses.

Director Personal Liability

Superannuation

Directors of a company can be held personally liable for unpaid superannuation if the SGC statement is not reported by the due date, usually being within 1 month and 28 days of the end of each quarter.

In order for the ATO to recover the outstanding superannuation, the ATO can issue a Director Penalty Notice (DPN) detailing the unpaid amounts.

PAYG and GST

In addition to superannuation, a director could also become personally for outstanding PAYG and GST.  Should a company not report its PAYG or GST liability within three months of the due date for lodgement then a director becomes personally liable for the outstanding PAYG or GST. As with superannuation, the ATO can issue a DPN to recover the outstanding PAYG or GST.

Options Available

The ATO has recently advised that it intends to actively pursue the recovery of unpaid superannuation during 21/22 Financial Year. Should a director require advice in dealing with outstanding superannuation and/or tax liabilities including a DPN, then they should contact their local Director of Rodgers Reidy, who are able to provide specialist advice and discuss the options available.