We recently attended an ATO forum where a question about superannuation clearing houses was asked. We had always thought the same rules applied to the one run by the government as did to the ones run by banks etc. But no, if you use the Small Business Superannuation Clearing House you can crib and extra day or two to pay your SGC contributions.
What are the guidelines for superannuation clearing houses to transfer funds to superannuation funds? How many days is it supposed to take? Some clients are reporting that a well-known clearing house is taking a long time to transfer payments.
We suggest that employers check the fine print with the superannuation clearing house when registering, as all superannuation clearing houses must advertise how long they take to allocate the money to the fund. If an employer is unhappy with the lag between payment and allocation, they have the option of moving to another superannuation clearing house that may better meet their requirements.
For example, the ATO Small Business Superannuation Clearing House allocates the money the day after it is received, although the employer meets their Superannuation Guarantee obligation the day they pay the clearing house, not the day the fund receives it (which is different to commercial clearing houses).
In June last year, the government announced significant changes to the Director Penalty Regime.
At that time, the ATO’s powers were expanded to enable pursuit of PAYG and Superannuation Guarantee debts from directors personally in circumstances where such debts remained unpaid and unreported for more than three months past the due date for lodgement.
Until now, we have seen the ATO send warning letters for unpaid PAYG only. But from now on it will be issuing warning letters in respect of Superannuation Guarantee debts.
Most directors understand they may avoid personal liability for a company PAYG tax debt by ensuring their BAS returns are lodged within three months of the due date (whether or not the debt can be paid). However, they are generally unaware that if a company cannot meet its superannuation obligations then it is required to submit Superannuation Guarantee Charge Statementand if this occurs more than three months late, the directors can be held personally liable for the unpaid superannuation sum.
So what if you receive a Super Warning letter?
In general, we would suggest:
- If there is a debt – Pay it! If the company is able, pay the debt in order to avoid personal liability (there are traps here so feel free to call to discuss with us.)
- If the company is unable to pay, it must always lodge its BAS and Superannuation Guarantee Charge Statements within three months of the correct lodgment/payment date. By doing so, a director will receive the 21-day grace period to avoid personal liability for a company tax debt if ever a Director Penalty Notice is received (so long as it is acted upon within 21 days of the date on the notice).
- If a company fails to lodge BAS and Superannuation Guarantee Charge Statements within three months of the due date, a director who receives a Director Penalty Notice cannot avoid personal liability for a company tax debt by placing their company into liquidation.
- If returns are currently outstanding for more than three months and the company is unable to pay, call Thomson Hall to discuss.
The Tax Office has released a Draft Superannuation Guarantee Ruling in which it states the Commissioner’s preliminary view on whether payments to employees are ordinary time earnings (OTE) and/or ‘salary or wages’.
Since 1 July 2008, employers are required to use OTE in calculating the superannuation guarantee (SG) for their employees.
If employers provide less than the required SG or pay the SG late, they will be liable to pay a non-deductible SG charge which is calculated using salary or wages.
While the Draft has not significantly departed from the Commissioner’s established view, his view relating to certain payments appears to have changed.
The Draft states that Christmas bonuses do not form part of salary or wages. However, the Commissioner currently considers these bonuses to be included in salary or wages.
The Draft also states that maternity leave and jury duty leave payments are OTE. Currently, the Commissioner considers that these leave payments do not form part of OTE.