The Tax Office are serious about all those parts of the law that they are paid to uphold but it seems they have become really serious about insisting on superannuation guarantee payments being met on behalf of employees.

A couple of years ago the rules relating to employer contribution to superannuation have changed. In the past the law required employers to contribute 9% of staff wages to a superannuation fund (the Superannuation Guarantee Contribution Levy) . The law required that this payment had to be made at least annually and if it was not made by July 28th for the previous year it was no longer tax deductible and certain penalties and interest applied.

Probably because of the large number of defaulting employers the rules have changed and employers are now obliged to make these payments at least quarterly. Because of the sophisticated cross checks that the ATO are able to carry out we are noticing in our office an increasing number of defaulting employers are being caught.

Those being targeted include companies where the only employee is the sole director and sole shareholder. It is understandable that when such a company has a less than good year one of the first expenses that is dropped off is the compulsory 9% that has to be paid to a super fund. However it is the law.

This emphasises the fact that for taxation purposes a company is a “person” and that person is NOT the owner of the company, who also happens to be the only director and the only shareholder and the only employee.

The most damaging part of the penalty that is imposed is the fact that when the payment is finally made, to the Tax Office, not to the superannuation fund, it is no longer a tax deduction to the company but the contribution is still taxed within the superannuation fund.