Superannuation Guarantee Charge (SGC) penalties: Cost calculator explained
What Is SGC (Superannuation Guarantee Charge)?
SGC is the automatic penalty for not paying superannuation on time.
You owe super. You don’t pay it. The ATO doesn’t wait for an audit. They automatically charge you.
SGC includes:
- The unpaid super amount
- Interest (calculated daily)
- Administrative charge (10% of unpaid super)
- Loss of tax deduction (you pay tax on the amount at your marginal rate)
One day late = SGC applies.
SGC Cost Calculation (Real Numbers)
Example: 1 employee, $961 monthly super, paid 1 day late
The unpaid amount:
- Unpaid super: $961
- Interest (rough estimate, 1 month late): $24
- Admin charge (10% of super): $96
Subtotal: $1,081 you owe the ATO
But there’s more:
Tax deduction loss:
- You lose the tax deduction on $961
- At 37.5% tax rate (top bracket): $361 extra tax owed
- At 30% tax rate (middle bracket): $288 extra tax owed
Total cost: $1,342–$1,442 for a $961 super payment
That’s 40%+ more than the original super amount.
Scale It Up
5 employees, each paid 1 day late:
- Unpaid super: $4,805
- Interest: $120
- Admin charges: $480
- Lost tax deductions: $1,800
Total cost: ~$7,205 for a $4,805 obligation
10 employees, 1 month late:
- Unpaid super: $9,610
- Interest: $240
- Admin charges: $961
- Lost tax deductions: $3,604
Total cost: ~$14,415 for a $9,610 obligation
One month’s lateness across 10 employees’ costs $14,415. That’s a $5,000 loss on top of the original super owed.
When SGC Is Triggered
SGC applies automatically when:
- Super is unpaid after the 7-day deadline (Payday Super)
- Super is unpaid after the quarterly deadline (old system)
- Super is miscalculated (even by accident)
- Employee doesn’t have a super fund yet (employer didn’t set one up)
SGC does NOT apply when:
- You’re a small business and comply with the Safe Harbour Code
- You self-disclose the error before ATO detects it
- The employee waived their super entitlement (rare)
The Safe Harbour Defense
Small businesses (fewer than 15 employees) have protection.
If you comply with the Voluntary Small Business Wage Compliance Code, you avoid SGC prosecution.
Compliance requires:
- Good faith effort to pay super correctly
- Systems to prevent non-compliance
- Regular audits of payroll
- Quick fixes when errors found
- Self-disclosure of mistakes
Self-disclosure doesn’t eliminate SGC, but it reduces penalties significantly.
How to Calculate SGC (If You Need To)
Step 1: Calculate unpaid super
- Contribution rate (12%)
- Employee earnings (Qualifying Earnings)
- Period unpaid (in days)
Step 2: Add interest
- Interest accrues daily from payment date
- Current rate: ~8.25%/year
- Rough estimate: 0.023% per day
Step 3: Add admin charge
- 10% of unpaid super
Step 4: Calculate lost tax deduction
- Unpaid super × your marginal tax rate
Example calculation:
- Unpaid super: $1,000
- Interest (30 days late): $25
- Admin (10%): $100
- Lost deduction (37.5% rate): $375
- Total SGC: $1,500
How to Avoid SGC
Strategy 1: Pay on time
Set up automatic super transfers on payday (or within 7 days). Don’t wait.
Strategy 2: Implement compliance systems
- Update payroll software quarterly (award rates, tax tables)
- Run monthly payroll audits (spot-check 3 pay slips)
- Track Qualifying Earnings correctly
- Maintain records for 5 years
Strategy 3: Train your team
Make sure whoever handles payroll knows:
- Award rates for your industry
- Qualifying Earnings definition
- Super payment deadlines
- Record-keeping requirements
Strategy 4: Self-disclose errors immediately
Find an error? Tell Fair Work before they find it.
- Calculate backpay
- Contact Fair Work Ombudsman
- Repay employees within 14 days
- Document everything
Self-disclosure reduces penalties by ~50%.
What Happens If You Ignore SGC
- Penalties compound daily
- ATO can refer for criminal prosecution
- Directors face personal liability
- Impacts credit rating
- Public naming on Fair Work website
Get Help Calculating SGC
If you’ve missed super payments, don’t guess.
In Campbelltown and Greater Sydney, we calculate SGC liability and help with self-disclosure.
📞 Call: 04 044 71 816
We’ll review your super payments, calculate any SGC, and help you self-disclose to minimize penalties.
Leave a Reply