THE SGC DOUBLE "WHAMMY"
25 06 2007
THE SGC DOUBLE "WHAMMY"
The Superannuation Guarantee Charge (“SGC”) is a tax that arises under the Superannuation Guarantee (Administration) Act. Although an employer may have paid the employees’ outstanding superannuation to their respective superannuation funds (albeit late) the amount will need to effectively be paid twice if the late payment gives rise to a SGC in respect of same. Most of you have probably advised your clients of this “anomaly” and to question whether it is better that any late payments are made to the Australian Taxation Office directly rather than the employees’ respective superannuation funds.
In March 2007 this double “whammy” issue became reality when a company appointed us as Voluntary Administrators due to an audit by the SGC department having assessed some years later a liability in excess of $100,000 as a result of the company having paid its superannuation commitments late to the respective superannuation funds. The SGC, arising some years later as a result of the audit, was essentially the only creditor of the company but the company could not afford to pay what it considered to be the same amount twice (despite by law the SGC being considered a completely separate debt).
We therefore urge you to reinforce to your clients that the late payment of superannuation and the subsequent arising of the SGC is not just a theoretical issue raised by “overly conservative accountants” but a clear and present danger to their company, its assets and future.