Industry Super Australia, (ISA), and Cbus have released a report outlining a major issue concerning levels of unpaid Super across the nation, to the tune of $3.6 Billion. It would seem that Australian Businesses have not been keeping up with their legal obligations to pay 9.5% employee Super payments.
Employers who fail to pay their own Super and those who attempt to exploit ‘loopholes’ in the system, such as labelling an employee as being a contractor, will now be closely looked at.
It should be pointed out however, that in many cases, failure to understand the depth of Super obligations is the problem and not an actual deliberate attempt to avoid paying it. For example, many owners of SMEs, (Small to Medium Enterprises), experience cash-flow problems at various times of the year and, rather than not pay their employees’ Super, they simply forego their own, perhaps even seeing this as a selfless act.
Unfortunately, Directors cannot pick and choose as to when to pay themselves Super any more than they can choose when pay it for an employee. You would be well advised to look closely at what you have been paying yourself versus what may be owed in unpaid Super and pay this as soon as possible in order to avoid additional interest charges or even up to 200% late payment fee.
It may also surprise you to know that if you are mainly using an individual for their labour, you will still need to pay Super for them regardless of whether you have categorised them as a Contractor or not, even if they have their own ABN and invoice you for hours worked instead of sit on your payroll.
The Senate has decided to crack down on unpaid Super and thus you can expect that the Australian Taxation Office will be ‘knocking on your door’ very soon if you haven’t been addressing your Superannuation obligations correctly; so talk to your accountant and make sure you are doing the right thing.
By the way, if you are one of those SMEs that have ongoing issues with cash-flow, contact me and I will train you on how to alleviate that problem from your business.