What is the SG Charge and how do I calculate it?
If you fail to pay the minimum 9 per cent of ordinary time earnings (OTE) into an eligible employee’s chosen super fund or, alternatively, into the default fund, or fail to make all your payments by the quarterly cut-off dates each year, you will incur a penalty. This penalty is called a SG Charge. It is calculated by adding the unpaid amount of super contributions (which are based on salary and wages, not ordinary time earnings) and a 10 per cent per year interest rate. On top of this you will usually be required to pay an administration fee of $20 per employee each year. It will cost you more to pay the SG Charge than to pay SG contributions to your eligible employees and you will not be able to claim this charge as a tax deduction. The Choice Liability Charge is payable if you have not offered an eligible employee a choice of super fund, or you have paid their super into an incorrect super fund. For more information visit the ATO website.
