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Is your company paying its superannuation guarantee liabilities on time?

posted 25 Apr 2012, 22:08 by Leighton Hill   [ updated 25 Apr 2012, 23:05 ]
Legal issues
Many SMEs do not pay sufficient attention to the need to carefully manage their superannuation liabilities.

Every time an employee is paid, unless their gross pay falls below the superannuation threshold (currently $ per week) the company must put aside an amount equivalent of 9% of the employee's gross pay as the company's contribution to their superannuation.

Depending on the size of the company's payroll, these contributions must be paid over to the employee's chosen superannuation fund from time to time. It may be monthly or quarterly.

If the company has tight cashflow they may be tempted to put off paying over the contributions, opting to use what cash is available to by stock or pay other creditors.

For many years companies that do this have got away with little or no penalty. But now things are about to change.

The Government has released draft legislation which affects all company directors and intend to introduce the amendments in the winter 2012 sittings of Parliament.

The changes are to the penalty regime in the tax law and the proposed amendments involve:

  1. Making directors personally liable for their company's unpaid superannuation guarantee amounts;

  2. Stopping directors attempting to discharge their director penalties by placing their company into administration or liquidation when unpaid Pay-As-You-Go (PAYG) withholding or superannuation guarantee remains unpaid three months after its due date; and

  3. In some instances, making directors and their associates liable to PAYG withholding non-compliance tax where the company has failed to pay amounts withheld to the Tax Commissioner.

To avoid getting caught each business should have procedures in place to ensure that superannuation liabilities are properly accrued and that their will be sufficient cash available when payment is due.

To find out more contact us for a no-obligation free one hour consultation.