Lodging a super guarantee charge statement late — or not lodging one at all — exposes an employer to a Part 7 penalty of up to 200% of the SGC owed under section 59 of the Superannuation Guarantee (Administration) Act 1992.1AustLII. Superannuation Guarantee (Administration) Act 1992 – Section 59 Stacked on top of the charge itself, that multiplier can triple what you would have paid by contributing on time. The Commissioner can remit the penalty, and often does, but how much relief you get turns almost entirely on whether you came forward before the ATO came looking.
What Triggers a Part 7 Penalty
If you miss paying an employee’s super guarantee in full, on time, and to the correct fund, the obligation converts into an SGC liability, and you must lodge an SGC statement with the ATO.2Australian Taxation Office. The Super Guarantee Charge The statement is due on the 28th of the second month after the quarter ends. A Part 7 penalty attaches when you lodge that statement late, when you never lodge and the ATO discovers the shortfall through audit or data matching, or when you ignore a formal request for information during an investigation.3Australian Taxation Office. Super Guarantee Penalties
One point matters more than most employers realise: even if you cannot pay the SGC by its due date, lodge the statement anyway. Lodging on time without paying is far cheaper than not lodging at all. Late lodgment is the primary trigger for Part 7 penalties, and non-lodgment is the trigger for locked-down director penalty notices covered further down.
Where records are withheld, the ATO can raise an assessment based on estimated figures. Estimated amounts are treated the same as amounts that were never reported, which has serious consequences for company directors.
What the 200% Attaches To
The 200% multiplier applies to the total SGC, not just the unpaid super. The SGC has three components, and none of them are tax deductible:
- The SG shortfall, calculated on salary and wages including overtime — a wider base than the ordinary time earnings used for regular SG contributions
- Nominal interest at 10% per annum, running from the first day of the quarter until the SGC statement is lodged or the quarterly due date passes, whichever is later. Nominal interest cannot be waived or reduced in any circumstances
- An administration fee of $20 per employee per quarter
A worked example shows how quickly this compounds. On a $10,000 shortfall covering two employees for a quarter, the SGC might come to roughly $10,000 plus around $250 nominal interest plus $40 in admin fees — about $10,290. A 200% Part 7 penalty adds another $20,580, taking the total to roughly $30,870. That is more than three times the original contribution.4Australian Taxation Office. Module 7 Reducing the Risk of Penalties
On top of the SGC and the Part 7 penalty, general interest charge accrues from the date of lodgment until the SGC is paid. GIC is at least tax deductible in the year incurred,3Australian Taxation Office. Super Guarantee Penalties but the rate was running at roughly 10.65% to 10.96% annually through the first half of 2026. Every day the SGC stays unpaid adds to it.
The non-deductibility of the SGC itself is easy to overlook. Regular super contributions are deductible. The moment the obligation converts to an SGC liability, that deduction is gone permanently, on the shortfall, the nominal interest, and the admin fee alike.
The Commissioner’s Four-Step Remission Framework
The 200% penalty is imposed automatically, but Practice Statement PS LA 2021/3 sets out a structured process the Commissioner uses to decide how much to remit.5Australian Taxation Office. PS LA 2021/3 – Remission of Additional Superannuation Guarantee Charge The four steps stack, and each one rewards early, voluntary action.
Step 1: Late Payment Credit
If you made a late super payment after the SG deadline but before the ATO contacted you, you can receive up to 40% remission. The best outcome goes to employers who paid within three months of the due date. If you never made any late payment, no remission is available at this step.
Step 2: Lodgment of the SGC Statement
This step carries the largest single reduction. Lodging the SGC statement voluntarily after the due date but before any ATO contact can attract up to 90% remission. Once an audit begins, that figure drops sharply. Employers who only lodge after a default assessment, or who are involved in repeated disengagement or phoenix arrangements, get zero at this step.
Step 3: Compliance History
The ATO reviews your record for SG and other tax obligations over the three years before your disclosure or the start of ATO compliance action, whichever came first. A clean record can add up to 15% remission. A poor history can increase the penalty by 30% instead.
Step 4: Other Mitigating Circumstances
The final step is graduated by severity:
- Up to 5% for an honest mistake that has been addressed or where a payment arrangement is in place
- Up to 10% where the SGC has been paid in full, or where the non-compliance happened in the employer’s first year of business with no prior experience
- Up to 20% for ill health, complex legal interpretation issues, or a third-party error such as a payroll provider mistake
- Up to 50% for natural disasters, ATO system outages, genuine worker misclassification where reasonable steps were taken, or participation in an ATO penalty relief arrangement
The practical takeaway is stark. Coming forward before the ATO contacts you can be the difference between keeping around 10% of the 200% penalty and keeping close to all of it.
Preparing and Submitting a Remission Request
A remission request needs the completed SGC statement plus evidence that maps directly to the four steps. A general letter asking for leniency will not produce a result. The ATO evaluates each step on its own criteria, so vague submissions get vague outcomes.
Lodge the SGC statement first. It has to be complete before a remission request can be processed, and every day of delay reduces the Step 2 remission and increases GIC.
Supporting documentation should include payroll records and bank statements that establish payment timing for Step 1, a written explanation that addresses each of the four steps specifically, evidence of any exceptional circumstances (medical certificates, court orders, letters from financial institutions, disaster documentation), and proof of any new systems put in place to prevent recurrence. The ATO will also draw on its own records of your lodgment history, payment history, and assets.6Australian Taxation Office. How to Request a Remission of Interest and Failure to Lodge Penalties
Submissions go through ATO Online Services for Business. Use the secure mail lodge or submit function to upload the SGC statement and remission letter together, and keep the receipt number. If online access is not available, registered post to the relevant ATO office gives you a tracking record. Monitor your secure inbox afterwards, because the ATO often requests more detail before deciding.
Objecting to an Assessment
If the assessment or the remission outcome is wrong, you have 60 days from the date of assessment to lodge a formal written objection.7Australian Taxation Office. Super Guarantee Charge Amendments or Objections The objection must respond to all relevant criteria, be signed by you or an authorised representative, and include copies of supporting evidence.
Lodging an objection does not pause the debt. You must still pay the SGC while the objection is under review, and GIC keeps accruing on any unpaid balance. If the objection is not fully allowed, escalation to the Administrative Review Tribunal or the Federal Court is available within 60 days of the objection decision.
When Directors Become Personally Liable
Part 7 penalties overlap with a much more serious risk. Under the director penalty regime, company directors become personally liable for unpaid SGC. Before the ATO can recover from a director directly, it must issue a director penalty notice, and directors then have 21 days to act.8Australian Taxation Office. Director Penalty Regime
What can be done in those 21 days depends on whether the SGC was reported on time:
- If the SGC was reported by its due date, the director penalty can be remitted by paying the outstanding amount, appointing an administrator, appointing a small business restructuring practitioner, or beginning to wind up the company
- If the SGC was reported late or not at all, the penalty is locked down. The only way to clear the personal liability is to pay the full company debt. Administration or winding up will not remove it
Estimated SGC amounts, issued when the ATO raises an assessment because no statement was lodged, are treated as never reported and automatically trigger a lockdown DPN. This is the single most dangerous consequence of failing to lodge: it removes every exit except full payment.
Directors sometimes assume reliance on a bookkeeper or fellow director will protect them. It does not. Resigning also does not remove liability for obligations that arose during the director’s tenure. The recognised defences are narrow — inability to participate in management due to illness or another acceptable reason, or having taken all reasonable steps to ensure the company met its obligations.