Unpaid super can leave a director personally liable for the unpaid SGC because a director penalty is a parallel liability that mirrors the company’s liability. The ATO can recover a director penalty 21 days after issuing a director penalty notice (DPN), while a new director can avoid a pre-appointment penalty by completing a specified action within 30 days of appointment (Australian Taxation Office, checked 2026-10-01). The ATO’s SGC guidance also starts with a 60% administrative uplift, subject to possible reductions (ATO, checked 2026-10-01).
What is the super guarantee charge made of?
The super guarantee charge is more than the unpaid super itself. Under ATO guidance checked 2026-10-01, it includes:
- any unpaid super;
- interest;
- administrative costs; and
- an additional amount if the employer has not followed the choice-of-fund rules.
For paydays from 1 July 2026, an employer no longer needs to lodge a super guarantee statement when it does not pay the minimum super guarantee amounts in full and on time. The ATO will calculate the super guarantee charge and send a notice of assessment (ATO, checked 2026-10-01).
How does the administrative uplift work?
The ATO applies an initial administrative uplift and may reduce it under specific conditions (ATO, checked 2026-10-01).
| ATO rule | Effect on the administrative uplift | Authority and check date |
|---|---|---|
| Starting amount | 60% of the total individual final SGC shortfalls and total individual notional earnings for a QE day (payday) | Australian Taxation Office, checked 2026-10-01 |
| No ATO-initiated assessment during the 2 years up to the relevant QE day | Reduced by 20 percentage points | Australian Taxation Office, checked 2026-10-01 |
| Voluntary disclosure statement before the ATO assesses the SGC | Reduced by up to 40 percentage points | Australian Taxation Office, checked 2026-10-01 |
Either or both reductions may apply, and the administrative uplift may potentially be reduced to nil (ATO, checked 2026-10-01).
What does Payday Super change for employers?
The ATO describes 2026-27 as the first year of Payday Super and says its approach will be supportive. It will not review employers that pay employees’ super for each payday and quickly fix errors. Its compliance activity will focus on employers that are not trying to move to more frequent payments, are not fixing errors, or are not paying super at all (ATO, checked 2026-10-01).
Is the general interest charge tax deductible?
No. A general interest charge incurred on or after 1 July 2025 cannot be claimed as a tax deduction (ATO, checked 2026-10-01).
When does unpaid super create a director penalty?
A company director must pay the SGC in full by its due date. If the SGC remains unpaid, the director is liable for a penalty equal to the unpaid amount (ATO, checked 2026-10-01).
The director penalty regime can also apply to a company’s unpaid PAYG withholding and GST. The amount personally payable by a director is called a director penalty (ATO, checked 2026-10-01).
Can the ATO recover an SGC penalty without a DPN?
Yes. While an SGC amount remains outstanding, the ATO may issue a DPN, but it can also collect the penalty by other means, including withholding a tax refund (ATO, checked 2026-10-01).
When a DPN is issued, the ATO says it can recover the penalty amounts 21 days after the notice is issued. That period is tied to the issue of the DPN; a notice is not the only collection route for an outstanding SGC (ATO, checked 2026-10-01).
What happens if the company or director makes a payment?
A director penalty is a parallel liability rather than a completely separate debt. A payment to either the company’s liability or the director’s liability reduces both liabilities by the same amount (ATO, checked 2026-10-01).
If a company has multiple directors, each director is likely to owe the same amount (ATO, checked 2026-10-01).
What can a new director do after appointment?
A new director will not be liable for a director penalty due before appointment if, within 30 days of appointment, the director ensures the company does one of the following (ATO, checked 2026-10-01):
- pays the outstanding amount in full;
- appoints an administrator;
- appoints a small business restructuring practitioner; or
- winds up the company.
Does resignation or company deregistration end the liability?
No. A director may remain liable for SGC that was due before resignation or connected with the director’s tenure where the reporting period ended before resignation. The ATO also says that a director who is liable for a director penalty remains liable after the company is deregistered (ATO, checked 2026-10-01).
Sources
- Australian Taxation Office — What happens if you don't pay super correctly
- Australian Taxation Office — Super guarantee penalties
- Australian Taxation Office — Director penalties
Frequently asked questions
What happens if a director penalty notice is unpaid?
The ATO can recover penalty amounts 21 days after it issues the DPN. For an outstanding SGC, it may also collect without issuing a notice, including by withholding a tax refund (ATO, checked 2026-10-01).
Does a payment by the company reduce the director’s personal liability?
Yes. A director penalty mirrors the company’s liability, so payments to either liability reduce both by the same amount. With multiple directors, each is likely to owe the same amount (ATO, checked 2026-10-01).
Can a new director avoid liability for earlier debts?
A new director will not be liable for a director penalty due before appointment if, within 30 days of appointment, the company pays the outstanding amount in full or takes one of the other specified actions listed by the ATO (ATO, checked 2026-10-01).
Does resigning as a director stop an SGC liability?
No. Liability may continue for SGC due before resignation or connected with the director’s tenure where the reporting period ended before resignation. It can also remain after the company is deregistered (ATO, checked 2026-10-01).