Just about every payroll officer in the country should already know that employer superannuation contributions must be paid quarterly so that the employer has no exposure to the Superannuation Guarantee Charge. Failure to make the contributions by the due date opens up an administrative burden of late payments to be calculated and made, calculations of interest payable to cover the detriment suffered by the employees by the late payment, penalties and preparation of multiple forms for lodgement with the ATO. The cost of all of this compliance can easily outweigh the detriment suffered by the employee.
Employer super contributions apply up to a ceiling amount of salary per quarter. This ceiling is called the maximum contribution base. For the FY2016 year it is $50,810 per quarter (equating to an annual salary of $203,240). Any employee with a salary higher than this is only entitled to 9.5% super on their salary up to this amount.
What you may not know is that on 1 July each year the maximum contribution base for super is indexed. So from 1 July 2016 the maximum contribution base is $51,620 (annual equivalent: $206,480). If 9.5% of super is not charged on the higher amount for relevant employees then a SGC shortfall arises, causing all the headaches noted above.
The difference in actual super contributions paid for an employee on this is very small though – there is an additional $810 of salary per quarter which super needs to be paid on, and so at 9.5% this is a mere $76.95 of contributions missed.
The lesson to learn here is that if you have any employees with salaries/packages over $200,000 then you may want to double check the employer super paid for them from 1 July 2016 to ensure that no shortfall arises.