One of the hot button topics for a lot of businesses this year has been superannuation compliance. We have seen headline after headline about business not paying super and then declaring bankruptcy leaving employees owed thousands. It is important that employers are aware of their obligations regarding super payments and ensure they strictly adhered to. It is also vitally important that employers ensure they are paying their staff the appropriate wage for the position they are performing. Again, we have seen a number of high-profile large businesses being found guilty of not paying staff accordingly and this can have a detrimental effect on the business not just in penalties and the back pay but also the damage it does to the reputation of the business.
For the majority of businesses, superannuation must be paid at least quarterly and this is what most businesses will stick to. For many small and medium enterprises quarterly is a big hit to the cashflow. Its recommended businesses transfer the superannuation amounts weekly or fortnightly when the payroll is done to another account making it easier for cashflow. With the majority of accounting packages offering direct superannuation payments to funds with a simple click of a button the process to pay the superannuation weekly or monthly rather than wait for the end of the quarter has become much easier.
Employers also need to be aware that a modern award can specify when superannuation should be paid and also to what fund it needs to be paid. There are also certain industry funds that will have their own rules on how often payments need to be made. Failing to meet these deadlines has serious consequences. If the superannuation is not paid within the quarter the employer is then liable for and SGC Charge as well as interest and administration fees. When calculating the SGC Charge it is necessary to include all wages paid to the employee during the period, not just ordinary time earnings which can add a significant amount to the amount owed to employees.
Making sure as an employer that you are aware of what award your employees are covered by in this current climate is vital. Regularly reviewing the award and ensuring that your employees are being paid correct entitlements is part of the obligation of being an employer. Most Awards are reviewed once a year for wage increases but there are awards that allow for that wage increase to be staggered over two increases throughout the year. It is also important to understand the different levels contained within an award and also any allowances that may be applicable. If you are unsure it is extremely important to have expert help. The excuse of ‘I didn’t understand’ will not be accepted if Fair Work Australia start an investigation.
As a business owner, compliance with both of these issues is vitally important and something that your bookkeeper should be able to help you with or point you to an expert that will be able to help. These are the types of issues that can stop you from being able to work on your business rather than in your business.
Please note this article provides general advice only and has not taken your personal, business or financial circumstances into consideration. If you would like more tailored financial, bookkeeping or business consulting advice, please contact us today.