ATO Warns Business To Be Ready For New SG Rules

by Mary Swire, Tax-News.com, Hong Kong

25 June 2003

Changes to the taxation law concerning employer superannuation guarantee (SG) contributions on behalf of employees will mean that from July 1, contributions will have to be made on a quarterly basis as opposed to the annual payment system previously in place.

The deadline for the first instalment will arrive on July 28 and firms will face penalties and other administrative costs for late payment according to Mark Jackson, Deputy Commissioner of Taxation for Superannuation. Subsequent deadlines will then fall on October 28, January 28 and April 28 each year.

The new rules will also place further bureaucratic burdens on businesses as they are required to report the details of contributions to a fund to individual employees at least once a quarter by letter, email or on the employee's pay advice.

"These reforms mean employees will be quickly aware if their employer is not doing the right thing and will be able to bring this to the employer's attention, or if they are unable to satisfactorily resolve the issue, to the attention of the Tax Office," commented Mr Jackson.

"Employers who don't meet the new deadlines will attract the Superannuation Guarantee Charge (SGC) which includes the outstanding SG plus administrative costs, charges and penalty interest, while failure to report contribution details to your employees may also attract a penalty," Jackson warned bosses.

However, Jackson did not envisage the ATO having to issue many penalties in this respect: "Some 84 per cent of employers already make SG contributions quarterly or even more frequently and can continue this practise under the new regime. For this reason we don't anticipate any widespread difficulty for employers in complying with the new system."

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