Superannuation Guarantee Charge Debt

Business owners tend to read an unpaid super figure as a deferred cost. It is not. Three things make it more expensive than the number on the ledger.

It is not deductible

Super paid on time is generally deductible. The superannuation guarantee charge is not. So the same dollar of shortfall costs the business more after tax once it has converted into the charge, and it keeps costing more the longer it sits there.

The calculation base is wider

On-time super is calculated on ordinary time earnings. The shortfall inside the charge is calculated on total salary and wages, which typically includes overtime. For a business with a lot of overtime, the charge is materially larger than the contribution would have been.

The general interest charge runs on top

Once the SGC liability is assessed and unpaid, the ATO general interest charge applies to it and compounds daily. So you have a non-deductible base, calculated on a wider figure, growing at a penalty rate. That is the whole problem in one sentence.

Unpaid superannuation guarantee charge is one of the amounts the ATO can pursue directors for personally, through the director penalty regime. The company owes it, and the director can be made to owe it too.

The critical variable is timing. Where the SGC statement is lodged within the required period, a director generally retains a wider set of responses to a penalty notice, including placing the company into administration or liquidation. Where the statement was never lodged and the deadline has passed, the notice can become one that is only remitted by paying the debt. Appointing an administrator at that point does not clear it.

Resigning does not help with liabilities that arose while you were a director. Nor does a notice being sent to an old address. The ATO can serve to the address on the company register, so directors who have moved and not updated the record can find the clock has been running without them.

Every file is different, and the ATO does not act on a fixed schedule. What follows is the general shape rather than a promise about your matter.

Every stage on that table is cheaper than the one below it. The single best predictor of how this ends is how early you move.

WeL’nd does not reduce an SGC assessment and does not negotiate remission. What we do is arrange funds so the charge is paid and the exposure stops growing, on a term the business can service.

1. 01

   Establish the real total

   Shortfall, nominal interest, administration component, general interest charge, and every quarter involved. Then the rest of the ATO position, because super is rarely the only thing behind.

2. 02

   Confirm the lodgement position

   Which statements are lodged and which are not. This changes what a director's options are, and lenders take a different view of a business that is compliant and behind versus one that is neither.

3. 03

   Look at security

   Equity in a home, an investment property or commercial premises is usually the cheapest route. Where there is no property, we look at unsecured business lending, invoice finance or equipment refinance to release cash.

4. 04

   Choose speed or price honestly

   If a penalty notice is live, speed may matter more than the rate. A short-term facility that buys the window, refinanced later into a longer-term structure, is sometimes the right sequence. We will say when it is not.

5. 05

   Direct funds to the ATO at settlement

   Lenders generally prefer statutory debt paid directly at settlement rather than advanced to the borrower. It is also faster, and it produces the evidence a director wants on file.

6. 06

   Fix the quarterly rhythm

   Super paid on the day it is calculated, not on the day it is due. Clearing the past and repeating the pattern is the most common way people end up here twice.

Unpaid super is a serious marker to a credit assessor, because it signals a business that has been funding itself from employee entitlements. That does not close the door, but it does mean the file has to answer the question directly.

That last line is not a formality. A credit assessor reading a clean explanation of a bad year, backed by numbers, will price a file differently to one who has to guess.

• We do not lend. We are a credit representative and a brokerage, and we arrange finance through a panel of lenders.
• We do not prepare or lodge SGC statements. That is your accountant or registered tax agent.
• We do not negotiate remission of interest or penalties with the ATO.
• We do not give legal advice about a director penalty notice, and we will tell you to get some.
• We do not repair credit files or remove correctly recorded listings.
• We do not promise approval. Every lender assesses its own file, and outcomes vary.

We have seen worse and found the way through. That certainty is the first thing we hand a client.

Three things make the first conversation useful: the ATO account statements, the last two years of financials, and an honest account of what else is outstanding. If there is a notice with a date on it, tell us the date first.

1. 01Download the full ATO account statements, including the super accounts, rather than working from memory.
2. 02Ask your accountant which SGC statements are lodged and which are not.
3. 03If you hold a notice addressed to you personally, book a lawyer or a registered insolvency practitioner this week.
4. 04Send us the numbers, including the ones you would rather not send.
5. 05Decide, with advice, whether you are funding the debt, disputing part of it, or doing both.