Roger Boghani

Super Guarantee charges (SGC) Specialist Accountant

Understanding the ATO Superannuation Guarantee Charge (SGC)

The Australian Taxation Office (ATO) oversees the administration of superannuation guarantee (SG) contributions, ensuring employers comply with their legal obligations. When employers fail to meet these obligations, they may incur the Superannuation Guarantee Charge (SGC). This charge serves as a penalty and a means to rectify unpaid or late superannuation contributions. Let’s explore the details of the SGC, its components, and its implications for employers.


What is the Superannuation Guarantee Charge (SGC)?

The Superannuation Guarantee Charge (SGC) is a penalty imposed on employers who do not pay the minimum required SG contributions for their eligible employees on time. The SGC is more than just a fine; it also includes the shortfall amount (the unpaid SG contributions), interest, and an administrative fee. The aim is to ensure employees receive their due superannuation entitlements and encourage employers to meet their obligations promptly.

Components of the SGC


The SGC is made up of three key components:


     1.    SG Shortfall Amount:

This is the difference between the amount of superannuation that should have been paid and the amount that was actually paid.

The shortfall amount is calculated based on the employee’s ordinary time earnings (OTE).

     2.    Interest:

 The ATO imposes an interest charge on the unpaid superannuation contributions.

The interest rate is set at 10% per annum and is calculated from the due date of the contribution to the date it is paid or assessed.

     3.    Administration Fee:

An administration fee of $20 per employee, per quarter is included in the SGC.

This fee covers the ATO’s cost of administering the recovery of unpaid superannuation contributions.

How is the SGC Calculated?

The SGC is calculated using a specific formula that incorporates the SG shortfall amount, interest, and the administration fee. For example, if an employer fails to pay $1,000 in SG contributions for an employee, and the payment is overdue by one year, the SGC would be calculated as follows:

              SG Shortfall Amount: $1,000

              Interest (10% per annum): $100 (for one year)

              Administration Fee: $20 (each employee for each Quarter)

In this case, the total SGC would be $1,120.

Reporting and Payment of the SGC

Employers who have not met their SG obligations must lodge a Superannuation Guarantee Charge Statement with the ATO. This statement provides details of the unpaid superannuation contributions and the associated SGC. Employers can lodge this statement online via the ATO’s Business Portal or by submitting a paper form.

Once the statement is lodged, the employer must pay the SGC to the ATO. The ATO then distributes the recovered superannuation contributions and interest to the affected employees’ super funds. It is important to note that the SGC is not tax-deductible, unlike regular SG contributions.


Consequences of SGC Non-Compliance

Failing to pay the SGC can result in further penalties and legal action. The ATO has the authority to impose additional fines and take enforcement actions to recover unpaid amounts. Employers who consistently fail to meet their SG obligations may face significant reputational damage and strained relationships with their employees.


Avoiding the SGC

To avoid incurring the SGC, employers should:

              Ensure SG contributions are paid on time, at least quarterly.

              Keep accurate records of employee earnings and superannuation payments.

              Regularly review payroll systems to ensure compliance with SG obligations.

              Seek advice from tax professionals or the ATO if uncertain about SG requirements.

The Superannuation Guarantee Charge (SGC) is a crucial mechanism to enforce employer compliance with superannuation obligations in Australia. By understanding the components and implications of the SGC, employers can take proactive steps to meet their SG responsibilities, thereby supporting the financial well-being of their employees and avoiding costly penalties. The ATO’s stringent enforcement of SG obligations underscores the importance of timely and accurate superannuation contributions in Australia’s retirement income system.


If you have been contacted by the ATO regarding a Superannuation Guarantee Charge (SGC), please reach out to Roger Boghani, a distinguished accountant based in Melbourne. He will assist you in resolving the matter efficiently and achieving an outstanding result.

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