Beware Shorter Timeframes For Superannuation DPN’s: Late Lodgement Will Make Directors Personally Liable

Superannuation is a mystery to most. It is taken out of wages, but what are the requirements for lodgement?

Directors will be unable to avoid a lockdown DPN if the SGC statement is not lodged by its due date.

What is a Super Guarantee Charge (SGC) Statement?

An employee’s fund must receive their super payments on or before the quarterly super due dates. An SGC statement is required when superannuation is not paid on time.

Source:https://smallbusiness.taxsuperandyou.gov.au/super-guarantee-employer-obligations/due-dates-for-super-guarantee-charge-and-statement

There is no 3-month grace period after the due date, as with GST and PAYG.

As shown in the table above, SGC payments are due one month after the super payment date.

Directors of small companies may be unaware of the requirement to lodge an SGC statement if they usually make Superannuation payments on time.

Accountants who notice that a client’s superannuation payment was not made on time can prevent a lockdown DPN by lodging the SGC statement on time. When a company has insufficient money to pay superannuation, they are unlikely to have the funds to engage an accountant to prepare SGC statements.

Remission of SGC amounts

A DPN for Superannuation is not locked down if the unpaid amount of the SGC is reported by the due date for the SGC statement. The penalty can then be remitted by ensuring the company does one of the following within 21 days of the notice:

• paying the debt
• appointing an administrator;
• appointing a small business restructuring practitioner; and
• beginning to wind the company up.

Source: https://www.ato.gov.au/individuals-and-families/paying-the-ato/if-you-don-t-pay/director-penalty-regime

If you do not take one of the above actions within 21 days of the date the notices are sent, the directors will continue to be personally liable for the penalties, and the ATO may start action to recover the penalties from all directors, including taking bankruptcy proceedings.

If it is a lockdown DPN, directors are personally liable for not reporting on time. The ATO can issue lockdown DPNS to directors even after liquidators have been appointed. 

How to lodge an SGC Statement

There are three ways to lodge your SGC statement:

• Complete the SGC statement and lodge using ATO online services.
• Use the SGC calculator in ATO online services.
• Use the SGC statement and calculator tool to generate a PDF version of your statement, then print and mail it to the ATO (not recommended). Time constraints apply with respect to postal holdups.

Further information on Lodging an SGC Statement is available from the ATO: https://www.ato.gov.au/businesses-and-organisations/super-for-employers/missed-and-late-super-guarantee-payments/the-super-guarantee-charge

What doesn’t Count as an SGC Lodgement.

The following do not count as an SGC lodgement;

• Single Touch Payroll (STP) lodgements;
• Submissions to Superannuation funds;
• Submissions to Superannuation funds or to clearing houses; and
• Submissions to the Small Business Superannuation Clearing House.

The Australian Taxation Office (ATO) use of Single Touch Payroll (STP) data for DPN’s

Single Touch Payroll submissions are made by accounting software on or before payments to employees. These lodgements record the amount of superannuation that should be paid to an employee.

The Australian Taxation Office (ATO) uses data from STP software and super funds to track employer compliance with Superannuation Guarantee (SG) payments. The ATO is using STP lodgements as the basis for DPN’s.

If there are no STP lodgements, the ATO can make estimates. If the company fails to report SGC obligations by the due date, the ATO may make a reasonable estimate of the unpaid and overdue amounts. The director penalty provisions apply to these estimated liabilities. The estimate is due and payable by the company on the date the estimate notice is given. The ATO can make directors personally liable for unpaid superannuation through the issue of a DPN. 

Confusion still exists

From 1 April 2019, SGC was required to be lodged by the SGC statement due date, and the 3-month timeframe was abolished.

Many outdated online articles and AI-powered answer engines incorrectly advise directors based on outdated information.

Directors should seek professional advice to ensure accurate and up-to-date information is being provided.