ATO’s Super Reviews – Employers being slammed with costly fees!

Employers are urged to pay their super entitlements on time – or be ready for a phone call from the ATO requesting a formal Super Review, which can result in costly penalties.

Following on from recent years, the ATO’s focus remains on ensuring that employers are paying the correct amount of superannuation on time. The ATO can easily crossmatch data from superannuation funds and single touch payroll data to flag unpaid or late super payments and automatically action their Super Reviews accordingly.

We highlighted this ATO focus last year, warning employers of the costly consequences. However, we have noticed that not everyone may have been taking the payment deadlines seriously, as evidenced by an increase in Super Review requests from the ATO. Late or non-payments are considered a serious issue, with penalties for non-compliance accumulating quickly.

To help demonstrate the impact of a Super Review, consider the following Case Study that our Associate Partner Adam Pasquill has prepared…

Real Life Case Study – Employer who paid their superannuation payments late.

  • A company accrued superannuation entitlements for its employees totalling $10,000 for the quarter. This super was due to be paid by 28th October 2020.
  • Due to a misunderstanding, the company completed the full payment on 30th October 2020 (2 days late) for that quarter.
  • The ATO, through cross-checking superannuation data with single touch payroll data, flagged this payment as ‘late’ in February 2024.
  • The business received a Super Review request, a formal and detailed review of the company’s superannuation payments over time, and required them to complete a ‘Super Guarantee Charge’ (SGC) form for the late payment.
  • Instead of charging interest on the late payment (2 days overdue), the ATO charged interest from the original due date to the date the SGC form was submitted. This meant instead of interest being approximately $5.50 based on 2 days being late to pay, the interest escalated dramatically to $3,680.
  • The ATO also charged ADMINISTRATION FEES totalling $20 per employee, per quarter, based on the late lodgement.
  • Also noting that if any employee worked OVERTIME within that period, this wage component usually wasn’t subject to super entitlements; but now it is.

Let’s summarise – in February 2024, the ATO issued penalty fees exceeding $3680 to a company for non-compliance; being two days late paying their September 2020 superannuation contributions.

This financial impact is certainly a good reason to be vigilant with your super obligations. However, at times we’ve seen even tougher consequences. A their discretion, the ATO can impose a penalty of up to 200% of the unpaid super obligations; effectively tripling the initial super obligation amount calculated. If we consider the case study above, the $10,000 super contributions amount could turn into $41,100 of non-deductible expenses; a serious threat to any business’s bottom-line. Furthermore, late superannuation payments are not tax deductible.  

Please take these deadlines set by the ATO seriously, and put plans in place to ensure compliance. 

To avoid non-compliance consequences, it is crucial to fulfill all your super obligations on time. For more information on payment deadlines and obligations, please refer to our previous article here or visit the ATO website here for more information. 

Our team is here to assist you, so please reach out to your Highview Accountant if you need further guidance.