2021 National Superannuation Conference

The Tax Institute

A common misconception is that it is compulsory under the law for employers to make superannuation contributions on behalf of their employees. This is not technically correct. Due to the limitations of the Commonwealth heads of power under the Constitution, the superannuation guarantee (SG) regime has been legislated as a tax. That is, if an employer fails to make SG contributions on behalf of its employees in the required amount by the deadline for the relevant quarter, it does not ‘contravene’ the super regime. Rather, a tax liability arises as calculated under the Superannuation Guarantee (Administration) Act 1992 (SG Act), known as the SG charge (SGC). SGC is not tax deductible to the employer. Further, where SG is underpaid or paid late, the employer also has an obligation to lodge an SGC statement. Where the SGC statements are not lodged, further penalties are automatically applied under Part 7 of the SG Act (Part 7 penalties). While these penalties are applied automatically under the SG Act, the Commissioner of Taxation (Commissioner) typically has the discretion to remit Part 7 penalties in whole or in part.

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