Tax Deductability of Late Employee Superannuation Payments

If you pay your employee superannuation late, it ceases to become a tax deduction! This means that you will not only pay the superannuation (eventually), but you will effectively pay more tax of between 34.5% and 49% of the super paid late depending on your personal tax rate.

One day late is sufficient to remove deductibility. Note that payment means that it has been received in clear funds by the super fund by close of business on the 28th day after the end of the quarter or month. Transferring the funds on the 28th probably means that they are late – splitting hairs; but still a fact.

As small business accountants we have observed many employers treat employee superannuation as discretionary in terms of when it can be paid. Our advice is simple. Superannuation is the first thing to pay, not the last.

And that is just the start of the problem. In addition to losing a substantial tax deduction you will also be subject to the following issues:

• You will be required to lodge a superannuation guarantee charge statement with the ATO.
• Interest and administration fees will be added. They too are not deducible.
• You will be required to pay superannuation on employee overtime (not the case if paid on time)
• The Directors will become personally liable for the super in the event of corporate insolvency.
• Potential ATO audit.

Who will ever know if I pay late? The answer to that is just about everybody involved. Employees, every Super fund you remit to and, of course, our good friends at the ATO if they care to look. The simple fact is that late payment leaves a permanent, indelible paper trail. On top of that the subject of non-payment has become big news recently and a higher level of awareness is in place with employees generally.

In summary; this is one payment that should never be made late under any circumstances. Please ensure that this payment is prioritised whether it is a monthly payment or quarterly payment.

Magnus sends a reminder to all clients on a quarterly basis. If you are not a client of Magnus and you would like to receive the reminder please email

[email protected] and request to be added to the reminder list.

If you would like to discuss your circumstances contact Warren Maris on 07-3483-0102 for an obligation free meeting.