The importance of the Superannuation Guarantee
Tags: super, superannuation guarantee, SG
Rachael came to see us recently after being referred by one of our clients. Having recently left her employer to start a new job, it seemed to Rachael that something wasn’t quite adding up with her superannuation.
Rachael is a well-known and hard-working restaurant manager, having worked with many local restaurants over the years. After moving to her new job she decided to check her super fund account but couldn’t find a correlation between her salary and her Superannuation Guarantee (SG) contributions from her previous employer. She became even more distressed when she realised another former employer hadn’t paid any super during the 12 months she’d worked there. It soon became clear that her employers had not adhered to the law when it came to paying her SG contributions. Rachael was right to be concerned.
As superannuation advisers, we see this situation too often and the impact to super savings can be huge. We suggested Rachael discuss the matter with her former employers in case the payments had inadvertently gone astray.
In this case, the employers became evasive so we advised Rachael to lodge an enquiry with the Australian Taxation Office (ATO). The ATO’s website, www.ato.gov.au, provides facilities and information for initiating an investigation into unpaid or lost superannuation.
Alternatively, the Fair Work Ombudsman, www.fairwork.gov.au, can help those who are having trouble receiving all of their workplace entitlements.
Employers failing to meet these obligations face serious penalties. Besides making up the SG shortfall, with interest, administration charges can apply.
Company directors are legally responsible for their company meeting its obligations; they can be held personally liable for breaches that include inadequate, false or misleading SG statements and/or records.
SuperStream, a set of regulations implemented by the federal government, requires employers to:
- submit all SG data electronically in a standard format;
- make payments electronically with a reference number linking it with payment data;
- submit data and payment on the same day; and
- respond to fund information requests within 10 business days.
Businesses with 20 or more employees must now meet the SuperStream obligations. Those with fewer than 20 employees must be compliant by 1 July 2016.
We advise clients who own businesses to ensure they fully understand their superannuation responsibilities. The ATO website is a treasure trove of information including a payment service specifically designed to help small businesses meet their obligations.
This Small Business Superannuation Clearing House is a free, online service for businesses with 19 or fewer employees – there are no excuses!
The ATO takes a dim view of employers failing to meet their responsibilities. Rachael’s former employers were forced to make up Rachael’s payments, exacerbating existing cash flow difficulties. Had they contacted the ATO to discuss their situation, the outcome may have been very different.
These days, Rachael regularly checks her super balance against her payslips, and her former employers are working with the ATO to better manage their obligations.
There’s a lesson in this for everyone.
If you need assistance in checking your SG payments, or if you have a business and need some advice in this regard, get in contact – we’re happy to help.
