Small business owner Peter Borain is warning other SMEs to review their bookkeeping after he was slapped with $26,000 worth of penalties for paying superannuation contributions late.
Employers not only have to pay a tax known as the Superannuation Guarantee Charge if they pay super late by even one day, they are also liable to pay any late super on overtime.
Borain, the owner of removals company MetroMovers, told SmartCompany he is almost ready to throw in the towel on his business after he discovered his bookkeeper of six months had failed to properly lodge $20,000 of super payments for his staff.
“As a small business owner, obviously you’re trying to keep your eye on everything, it takes a bit of time to realise these things have happened and in this case it took six months to realise this person was just not capable in the role,” Borain told SmartCompany.
“We pulled them aside and said, this is ridiculous, we need to find out what’s going on.”
Borain says that by the time he discovered the depth of his bookkeeper’s incompetence, several of his employees’ super providers had contacted their members to let them know they had been paid late.
“A couple of guys then went to the ATO and then that opened up Pandora’s Box,” he says.
Borain says he pleaded his case with the ATO, explaining the situation with the bookkeeper and that MetroMovers had never previously missed any payment.
“We explained this to the ATO, that in the past there’d been no issues, but they are more interested in pushing the penalty,” he says.
MetroMovers was liable to pay the Superannuation Guarantee Charge on overtime, which added an extra $25,132.53 on to Borain’s super obligation.
Borain says his 11-year-old business, which turns over around $3 million a year and has offices in Melbourne, Sydney and Brisbane, simply can’t absorb the same penalties designed for big business.
“All these awards and regulations are designed around large corporations like banks or Myers,” he says. “Then they give them to the small guy and say you must deal with all this or else we’ll bring the hammer down on you.”
But Borain says the massive super fine isn’t the only reason he’s ready to throw in the towel.
“We continue to pay our payroll tax, GST, work cover, company tax, PAYE and fuel levies, and [the] red tape and administration we endure as SMEs is a disgrace,” says Borain.
He says the removals industry also faces a huge threat from companies that undercut competitors who are doing the wrong thing by offering staff cash payments.
“They’re hiring backpackers, and some of them are very qualified, they have worked in removals overseas, but they come here for short period and they pay them cash in hand to avoid super and payroll tax,” says Borain.
“We’ve reported this before and nothing has happened. The way I find out about it is when these guys come and work for us and they say, ‘Wow can’t believe you’re paying super and overtime’.”
Borain says he is now looking to sell the business, although he says the market is tough right now, and is thinking of a move to the US or South Africa, where he has done business before.
“It’s a lot easier in other countries like South Africa and the US. Employment regulations are much easier, the tax system is easier, it’s not as expensive to do business and overregulated,” he says.
Borain says Australia offers no help for SMEs, who simply cannot afford to employ using the same award system as big corporations.
“We shouldn’t have the same rules in place… We should have our own, completely different award,” he says.