Super guarantee levy

The Super Guarantee Levy is, sadly, one of the most complex taxes to administer and the penalties for making a mistake can be 200% of the SGL not paid.

So if you pay $50k in super quarterly and you pay one day late (each quarter) you will potentially incur:


  1. A fine of $400k a year; and
  2. Lose the tax deduction for the super and the fine; and
  3. Incur interest for late payment until you lodge the SGC Statement.

Given the massive fines and administrative burden the super guarantee levy can have on a family business it is not surprising that Westcourt is committed to SGC compliance that cuts through red tape and can withstand ATO reviews and employee complaints.

In Australia every employee is entitled to superannuation at the rate of 10.5% (FY 23) of their ordinary earnings. And the definition of ordinary earnings is complex: but it ordinarily excludes items like overtime or allowances that are a clear re-imbursement of costs incurred by the workers.

Using a payroll service provider like Xero or Key Pay that properly tracks the allocation of wages that are ordinary times earnings compared to total wages is an important part of a company’s tax governance and SGL compliance. And if this process is managed by the internal team: the retention of this knowledge with evidence of review is an important step – it is surprising how many businesses have no recollection or records as to how the SGL obligations were met – and the bookkeeper or accountant who did the calculations has then resigned (with a new team member trying to decipher the trail).

So it is for this reason that when we help clients with the preparation of an income tax return that we also review, and document, the super guarantee levy compliance.  The documentation is key for clients to ensure they have accountability and transparency in their overall SGL management.

While software solutions can be great at managing HR and payroll – if the software is set up poorly – the business will struggle with managing the super guarantee levy.

At Westcourt our payroll solutions include a discussion and advice on the payment of superannuation obligations to the relevant parties including the Superannuation Clearing House. And if these payments are missed we can then further assist with the preparation of the Superannuation Guarantee Charge Shortfall Returns together with the interest and penalty calculation.

The SGC Shortfall Return must be lodged to stop the obligation on late payment interest accruing. It is the date the form is lodged as compared to the date the super is paid.

The difficult part of SGL compliance is that in addition to the calculation of SGL the payment of your SGL must be made within 28 days at the end of each quarter. With the result that late payments will be non-deductible and the superannuation must then be paid directly to the Australian Tax Office rather than to the employees superannuation fund.

The payment times reporting for SGL compliance is becoming increasingly important. As the SGL obligations are reported through Single Touch Payroll and as the superannuation funds notify the ATO of the date of receipt of SGL contributions – the data matching is incredibly sophisticated.

At Westcourt we are well placed to help family businesses comply with their superannuation obligations including:

  1. We have dedicated payroll specialists with expertise in SGL compliance who actively track and monitor ongoing SGL payments.
  2. We are tax leaders in the profession with senior positions within the Tax Institute on tax issues that affect Small to Medium Sized businesses including super guarantee levy compliance.
  3. We check and review every employer we assist to ensure that superannuation guarantee obligations are being met and we provide written advice on the same.
  4. We are part of the GGI Global Alliance Network – a business of over 29,000 staff with local on the ground knowledge helping you employ staff offshore.

Given the penalties and fines with SGL, and the unique skillset of Westcourt, why not call us to review your super guarantee levy compliance, HR governance and super guarantee shortfall return?

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