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 (quarterly under current rules; 7 business days of payday under Payday Super from 1 July 2026)
- Underpayment — the amount paid is less than the required 12% of qualifying earnings (or OTE under current rules)
- 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
The SGC has three components. All three must be paid together when lodging an SGC statement with the ATO. Crucially, the shortfall component of the SGC is calculated on salary and wages — a broader base than the Ordinary Time Earnings or Qualifying Earnings used for regular super contributions.
SGC formula
SGC = Super shortfall (on salary & wages) + Interest (10% p.a. × days ÷ 365) + Admin fee ($20 × employees × quarters)
Worked example
Scenario: A business with 5 employees misses a quarterly super payment of $3,000 in total. Payment is made 45 days late.
- Super shortfall: $3,000
- Interest: $3,000 × 10% × (45 ÷ 365) = $36.99
- Admin fee: $20 × 5 employees × 1 quarter = $100.00
- Total SGC: $3,136.99 — and none of it is tax deductible
Use the Payday Super calculator to model SGC costs for your specific payroll before and after the July 2026 changes.
SGC is not tax deductible
Regular super contributions are a deductible business expense. SGC payments are not. This means the after-tax cost of an SGC is materially higher than simply paying the super on time. A $3,000 super shortfall paid as SGC costs more than $3,000 in after-tax terms.
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 |
| 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
- Administration fee ($20 per employee per quarter) may be waived or 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
- The 10% per annum 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.
