Summarise with AI
What triggers the SGC
The SGC is not discretionary — it applies automatically whenever an employer fails to meet their superannuation guarantee obligations. There are three distinct triggers, each of which independently activates the charge.
Three events that trigger the SGC
- Late payment — super is not received by the employee's fund by the applicable deadline (7 business days of payday under Payday Super from 1 July 2026; the quarterly deadline for quarters to 30 June 2026)
- Underpayment — the amount paid is less than the required 12% of qualifying earnings (OTE for quarters to 30 June 2026)
- Wrong fund — payment is made to a fund that is not the employee's chosen or stapled fund
It is important to note that the SGC applies even if the shortfall was caused by an administrative error. There is no "good faith" exception. The obligation is on the employer to ensure payment is correct, on time, and to the right fund.
How SGC is calculated
For paydays from 1 July 2026 the SGC has three main components, plus a choice loading of 25% if the contribution also went to the wrong fund. The ATO assesses it for each payday with a shortfall, and it accrues until the shortfall is paid.
SGC formula
SGC = Super shortfall + Notional earnings (GIC rate, daily) + Administrative uplift (up to 60% of shortfall + notional earnings)
Quarters to 30 June 2026 used the old formula: shortfall (on salary & wages) + 10% p.a. interest + $20 per employee per quarter, none of it deductible.
Worked example
Scenario: A payday's super of $3,000 reaches the fund 45 days late, in a payday after 1 July 2026, with no voluntary disclosure. Illustrative GIC rate of 10.6%.
- Super shortfall: $3,000
- Notional earnings: $3,000 × 10.6% × (45 ÷ 365) ≈ $39
- Administrative uplift: 60% × ($3,000 + $39) ≈ $1,823
- Total SGC ≈ $4,862 — tax deductible, but about $1,862 more than paying on time
Use the Payday Super calculator to model SGC costs for your specific payroll before and after the July 2026 changes.
Deductible now, and still far dearer than paying on time
For paydays from 1 July 2026 the SGC is tax deductible, which the old quarterly charge was not. The deduction does not rescue it: the administrative uplift alone can add up to 60% to the shortfall, and the 25% late payment penalty and the general interest charge on an unpaid SGC are not deductible at all.
SGC under payday super
The introduction of Payday Super from 1 July 2026 significantly changes the frequency at which SGC can be triggered.
| Feature | Before 1 July 2026 | From 1 July 2026 (Payday Super) |
|---|---|---|
| SGC trigger point | Quarterly deadline missed | Each individual pay run deadline missed |
| Maximum SGC exposures per year | 4 (one per quarter) | Up to 52+ (one per weekly pay run) |
| Deadline for payment | 28 days after quarter end | 7 business days after payday |
| Interest | 10% a year | Notional earnings at the GIC rate, daily |
| Administrative component | $20 per employee per quarter | Uplift of up to 60% of shortfall + notional earnings |
| Tax deductible | No | Yes (not the 25% penalty or GIC on an unpaid charge) |
| Risk level for manual processes | Moderate | High — automation strongly recommended |
Under the new rules, a business that manually processes super and misses a single weekly pay run now faces an SGC event. For employers who previously managed with quarterly reminders, the shift to per-payroll compliance requires a systematic change in process.
Voluntary disclosure
Voluntary disclosure is the process of self-reporting a super shortfall to the ATO before the ATO independently identifies it. It is strongly recommended over waiting for an audit or compliance review.
What can be reduced or waived
- The administrative uplift can be substantially reduced
- ATO may take a more cooperative approach to the audit process
What cannot be waived
- The super shortfall itself must be paid in full
- Notional earnings (the interest component) cannot be waived
To make a voluntary disclosure, employers lodge a Superannuation Guarantee Charge Statement with the ATO. Detailed instructions are available on the ATO's super for employers pages. Acting early — before the ATO contacts you — maximises the chances of a favourable outcome.
How to avoid SGC
The SGC is entirely avoidable with the right systems and processes. Here are the four steps every employer should take:
Use payroll software that automates super submission
Manual processes introduce human error and missed deadlines. A payroll integration that automatically calculates and submits super with each pay run eliminates this risk. See RosterElf's payroll integration.
Submit via SuperStream 2–3 days before the deadline
Clearing houses take 1–3 business days to process and forward payments. Submitting on day 6 of a 7-business-day window leaves no buffer. Aim to submit within 2–3 business days of payday.
Verify super fund details are current
Paying to an invalid or outdated fund triggers SGC just as a late payment does. Confirm USIs and member numbers before each period, and check for new stapled fund requirements for recently-engaged employees.
Monitor clearing house confirmation receipts
Submission to a clearing house is not the same as receipt by the fund. Check that clearing house receipts confirm successful forwarding to each employee's fund. Follow the complete Payday Super employer checklist for a step-by-step compliance workflow.
