Delayed Superannuation Payments: What are the Risks?
Failing to pay superannuation on time often results in hefty fines, back payments with interest, legal action on non-compliant businesses…
Failing to pay superannuation on time often results in hefty fines, back payments with interest, legal action on non-compliant businesses…
ATO Focus on Investment Loan Redraws: Ensure Accurate Tax Reporting and Navigate Interest Claims with Expert Advice.
PPSR explained: A key tool for safeguarding your interests in personal property and gaining an edge in insolvency situations.
Understanding GST on Foods: Chobani’s AAT Case Highlights the Complexities in Taxable and GST-Free Items.
Empower your organisation with a strong workplace culture. Essential for talent retention, employee engagement, and success in the competitive market.
Navigate small business complexities with expert partners. Essential support for establishing, growing, and safeguarding your business.
Recently, an increasing number of businesses have been caught out by the Australian Taxation Office (ATO) for failing to pay superannuation on time. The ATO strictly enforces superannuation compliance, imposing hefty fines, back payments with interest, and even legal action on non-compliant businesses. Beyond these penalties, delayed super payments can also harm a business financially by forfeiting tax deductions, disrupting cash flow, and negatively impacting employee satisfaction.
As an employer in Australia, you are legally required to make superannuation contributions on behalf of your employees. These payments must be made to their nominated superannuation funds, and failure to meet this obligation on time can result in significant penalties for your business.
As of February 2025, employers are required to contribute 11.5%* of an employee’s ordinary time earnings to their superannuation fund.Â
As for deadlines, employers must ensure that superannuation payments are made and received by employees superannuation funds within 28 days after the end of each quarter, as outlined below:
Quarter | Superannuation Guarantee Due Date |
1 January — 31 March | 28 April |
1 April — 30 June | 28 July |
1 July — 30 September | 28 October |
1 October — 31 December | 28 January |
From 1 July 2026, the ATO will require superannuation payments to be made at the same time as employee wages, rather than on a quarterly basis
*As of the 1st of July 2025, the rate will increase to 12%.Â
With the implementation of SuperStream, the Australian Taxation Office (ATO) now has real-time access to wage and superannuation payment data, making it easier to identify late or missing payments.Â
Employers who fail to meet their superannuation obligations can quickly be identified and face fines, back payments, and loss of tax deductions. These costs can add up quickly, impacting cash flow and increasing overall business finances.
Employers who miss the superannuation payment deadline are subject to the Superannuation Guarantee Charge (SGC), which includes:
Unlike paid on-time superannuation contributions, payments made under the SGC are non-deductible for income tax purposes, increasing the financial burden on businesses.Â
For example, consider a business with 10 employees, earning total wages over the quarter as follows:
If paid on time, the Superannuation guarantee amount due is $23,000 (11.5% of $200,000). When paying superannuation on time, the employer qualifies for an income tax deduction, reducing their overall cost. In this case, we will use a trading company with a base tax rate of 25%. The tax deduction would account for $5,750, reducing the net cost to $17,250.
However, if the employer fails to meet the payment deadline, the associated costs increase significantly due to the Superannuation Guarantee Charge (SGC). SGC is calculated on total salary and wages, not just Ordinary Time Earnings (OTE). This means that when an employer lodges an SGC statement for overdue superannuation, they must include all wage components, such as overtime, bonuses, allowances, and certain leave payments.
As a result, businesses potentially face a higher superannuation liability than they would have if payments had been made on time, further compounding the financial strain. Additionally, because SGC payments are non-tax-deductible, employers not only incur additional superannuation costs but also lose out on valuable income tax savings, increasing the overall financial impact on the business. Interest is payable on the first day of the quarter until the SGC form is lodged with the ATO.
In this case, the SGC would account for:Â
Penalty Component |  |
Superannuation – on overtime | $11,500 |
SGC administration fee ($20 × 10 employees) | $200 |
Interest (10%p.a.) – approximate | $550 |
Loss of tax deduction on ordinary time earnings | $5,750 |
Total additional cost | $18,000 |
By missing the superannuation deadline, the employer is now out of pocket an additional $18,000 – imagine this over four quarters – you would be looking at $72,000!
In addition to the SGC, the ATO may apply a Part 7 penalty to employers faulting payment of the superannuation to their employees on time.Â
The Part 7 Penalty: consists of an additional penalty of up to 200% of the SGC amount.Â
Another additional risk encountered by faulty business owners and/or directors is the Director Penalty Notice (DPN). Through this, the company directors can be personally liable for unpaid superannuation, placing their personal assets at risk.
As the previous example shows, missing superannuation payments to your employees can result in costly infringement from ATO. While completely missing a payment can result in significant financial consequences for your business, proactively reporting a delay to the ATO can help minimise costs.
Therefore, addressing late payments promptly is far more beneficial than waiting for an ATO audit. Submitting an SGC (Superannuation Guarantee Charge) statement as soon as a delay is identified can significantly reduce interest charges and potential penalties, making early action a smart choice.
The SGC interest (10% per annum) is calculated from the start of the quarter until the SGC is paid in full, meaning the longer the delay, the higher the interest accumulated. Additionally, voluntarily lodging the SGC form may prevent further penalties, whereas an ATO audit can result in harsher consequences, including additional penalties of up to 200% of the SGC amount.
A business forgets to pay $15,000 in superannuation for the April–June quarter, due on 28 July.
Case 1: Immediate SGC Lodgment (August)
SGC Interest (10% per annum, calculated from 1 April – 31 August = 5 months): $625
Â
Case 2: ATO Audit in 12 Months (August the following year)
SGC Interest (10% per annum, calculated from 1 April – 31 August next year = 17 months): $2,125
Â
By lodging the SGC form immediately, the employer saves $1,500 in interest and avoids potential penalties. If they waited for an ATO audit, interest charges would keep increasing, and additional penalties could be imposed. Taking prompt action not only reduces financial consequences but also demonstrates proactive compliance, which may lead to a more favourable outcome with the ATO.
Processing superannuation payments with each payroll cycle rather than waiting until the end of the quarter provides several significant advantages for businesses.
Firstly, it enhances cash flow management by distributing payments in smaller, manageable amounts, rather than accumulating a large lump sum at the end of the quarter. This approach helps businesses maintain financial stability and avoid unexpected financial strain.
Secondly, it reduces the risk of missing payment deadlines and incurring the Superannuation Guarantee Charge (SGC)—which includes non-deductible penalties, interest, and administration fees. Late payments not only increase costs but also eliminate valuable tax deductions.
Additionally, automating super payments with each pay cycle simplifies administration, improves compliance, and minimises the risk of human error. By adopting this proactive approach, businesses can ensure regulatory compliance, avoid unnecessary penalties, and maintain a stronger financial position.
Sign up to our newsletter to stay up to date with the latest Breathe news and resources.