Late Payments of your employees superannuation are not tax deductible
With the STP (Single Touch Payroll) being compulsory from 1 July 2019, the ATO will be receiving real time data of your business’ payroll after each pay run is processed.
This means the ATO will now know the live payroll details of each employee including their superannuation entitlements.
Superannuation funds are also required to send reports to the ATO, letting them know when they have received payments and allowing the ATO to match the data with employers STP’s records.
The ATO says this is a step forward in making sure employees entitlement are being paid and paid on time.
It is a legal requirement that superannuation for eligible employees be paid 28 days after the end of each quarter to their nominated superannuation fund.
Generally, if you pay an employee $450 or more in a calendar month, superannuation is required to be paid at the rate of 9.5% of the employee’s ordinary time earnings.
Superannuation which is not paid after this date incurs interest, administrative penalties and is no longer tax deductible.
For the superannuation payment to be deductible, the superannuation fund will need to receive the contribution by the due date.
If the due date falls on a weekend or public holiday the payment can be received by the superannuation fund on the next working day and still be deductible.
If you pay your employee superannuation contribution late, not only will the ATO know that you are not meeting your employer obligations and impose penalties, you are also missing out on a chance to lower your businesses’ taxable income and you will likely pay more tax!
We recommend that superannuation is paid with a few days grace before the due date to avoid any late payment.
Don’t get caught out, pay your obligations on time!
Contact CrossCorp to find out more.