🇦🇺Australia

Superannuation Guarantee Shortfall & SG Charge

3 verified sources

Definition

Fair Work Awards define 'ordinary time earnings' narrowly. Contractors using manual timesheets or generic payroll systems often incorrectly classify weekend penalty rates, allowances, or shift loadings as non-ordinary time, underfunding super contributions. The ATO recovers unpaid super plus a 200% penalty tax; this can total AUD 8,000–20,000 for a small contractor.

Key Findings

  • Financial Impact: AUD 5,000–15,000 per annum in SGC exposure; penalty is 200% of shortfall plus 10% interest
  • Frequency: Annual (assessed by ATO each financial year)
  • Root Cause: Misunderstanding of Fair Work Award definitions of ordinary time earnings; manual calculation without award-aware payroll rules; no automated award compliance checking

Why This Matters

The Pitch: Australian construction contractors underestimate super obligations on 5–10% of payroll due to manual award interpretation errors. A 30-person team with average wage AUD 65,000 faces AUD 5,000–15,000 in SGC exposure annually. Automated super calculation aligned to Fair Work Awards eliminates this penalty risk entirely.

Affected Stakeholders

Payroll administrators, Finance managers, Business owners (final liability)

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Financial Impact

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Current Workarounds

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Methodology & Sources

Data collected via OSINT from regulatory filings, industry audits, and verified case studies.

Evidence Sources:

Related Business Risks

Unbilled Labour Hours & Time Theft

AUD 2,000–6,000 per employee annually; 5–15% of billable labour hours lost to time theft or underreporting

Manual Payroll Processing & Reconciliation Delays

AUD 3,000–8,000 per month (payroll admin overhead); 20–40 hours per month of manual rework

GST/BAS & STP Lodgement Errors & ATO Penalties

AUD 2,000–6,000 per annum in BAS correction costs and interest; STP Phase 2 penalty up to AUD 13,500 per year for non-compliance

Manual Timesheet Approval Bottlenecks & Payroll Delays

AUD 8,000–15,000 per annum in lost payroll productivity; 2–4 working days delayed per payroll cycle

Unbilled Change Order Work Due to Incomplete Documentation

Estimated 2-5% of contract value per change order; typical commercial fit-out project: AUD $50,000-$150,000 in unbilled work per year

Delayed Change Order Approval and Payment Hold-Up

15-30 day payment delay per change order; interest cost @ 6% p.a. on average AUD $300,000 WIP = ~AUD $5,000/month opportunity cost for mid-sized contractor

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