Jason Hurst, technical superannuation adviser for Accurium, said as well as late contributions being deductible, the new laws also mean that the administration penalty and interest that relates to that late contribution are also deductible.
“Where a determination is made, whether that be by voluntary disclosure or by the ATO, and they give a deadline to pay that admin penalty and that interest, when or if that deadline is failed, and further general interest charge and penalties accrue, it will be that part that will be non-deductible,” Hurst said.
He continued that there presently doesn’t seem to be a way in which an employer can “absolutely guarantee” that a contribution happened on the due date or later.
“If the employer pays just one day late it is technically considered late,” he said.
“But if an employer does the right thing and sends a contribution in and it doesn’t hit an employee’s super fund until eight days later, at the moment there doesn’t seem to be a way for that guarantee to happen.”
He continued that if the ATO did want to “deeply look into” a situation where this may occur and found a contribution was one day late, it can apply interest and potentially a penalty to that.
“But the way this new system will work, it would only be interest for that one day that the contribution is late, whereas under the current system, if a contribution is found to be one day late, the interest goes right back to the beginning of that quarter,” he said.
“Employers currently might be paying interest on three months and one day rather than the one day, which would apply in the new system.”
Hurst continued that the transition period may be “tricky” as the new laws come into play with some employers electing to pay everything in June, and starting with a “clean slate” while others may hold off until the 28 July,
“Then when we’re looking at those early July qualified earning periods, some people are getting paid fortnightly, and some people might be getting paid monthly, so there’s going to be all sorts of things happening in that month,” he said.
He gave an example of a person being paid weekly on a Wednesday and when the laws come into effect next July, will have pay periods on 1, 8, 15 and 22 July – on or about the 28 July date under the new system.
“That employer is going to also need to square the books for the prior quarter and any contributions in that period are going to get allocated to the prior quarter first,” he said.
“So, up until 28 July, the employer would want to make contributions that cover the prior quarter, plus the four weeks of pay in that period, and after that they’ll just be able to do that weekly. If the person was getting paid fortnightly, you’re going to have two fortnights in that first 28 days, plus potentially the prior quarter.”
