Superannuation, Directors’ Liability, and the Ostwald Case 

The recent Federal Court decision in Ostwald v Commissioner of Taxation shows how important it is that employee super contributions don’t just leave the company’s bank account by the due date — they must actually be received by the super fund on time. Missing these strict deadlines can create significant company liabilities and expose directors to personal liability through Director Penalty Notices (DPNs). 

When is super considered “paid”? 

A common misconception is that super is “paid” once the money is debited from the company’s bank account or sent to a clearing house. In fact, both the ATO and the courts confirm that a contribution is only “paid” on the date the super fund actually receives it. 

If a company uses a clearing house, processing times can vary. Any payment that reaches the fund after the due date is treated as a late payment — even if it left the company’s account on time. 

The Ostwald case: a cautionary tale 

In the Ostwald case, the Federal Court looked at whether three directors were personally liable for their company’s super guarantee charge (SGC) debts. 

What happened: 

• The clearing house trap: The company’s bank account was debited on the super due date, but the money passed through a clearing house and reached the super funds three days late. 

• SGC triggered: Because the funds arrived late, an SGC liability arose. 

• Directors held liable: The company didn’t report the shortfalls to the ATO by the required date, so the directors became personally liable for the unpaid amounts through DPNs. 

What happens when super is paid late 

If an employer doesn’t pay the right amount of super to the fund by the due date, the law imposes a super guarantee charge (SGC) on the shortfall. 

The employer must then lodge an SGC statement with the ATO by the 28th day of the second month after the end of the quarter. 

Director Penalty Notices and the “lockdown” rule 

A director penalty is a parallel liability — the director’s personal liability mirrors the company’s liability. If the company doesn’t pay the SGC, the ATO can recover the amount personally from the directors after issuing a DPN. 

Whether a director can have the penalty cancelled (remitted) without paying the debt in full depends on when the SGC statement was lodged: 

Protections and defences for directors 

The director penalty rules offer only limited defences. A director may avoid liability if they can show that, for the entire period since the company’s obligation first arose, one of the following applied: 

• Illness or another acceptable reason: They didn’t take part in managing the company (and it would have been unreasonable to expect them to) because of illness or another acceptable reason. 

• All reasonable steps: They took all reasonable steps — or there were none available — to make sure the company paid the liability, appointed an administrator, appointed a restructuring practitioner, or began winding up. 

• Reasonably arguable position (SGC or GST only): The company treated the law in a reasonably arguable way and took reasonable care. 

Importantly, delegation is not a defence. You can’t avoid a director penalty by arguing that you relied on others — including fellow directors or professional advisers — to make sure the obligation was met. 

What the new “Payday Super” regime changes 

From 1 July 2026, the new Payday Super regime began, significantly changing how and when super must be paid. While the Ostwald decision was based on the old quarterly rules, its core principle still applies: super is only “paid” when it is actually received by the employee’s fund. 

Tighter deadlines and clearing house risks 

Under Payday Super, employers must pay super at the same time they pay salary and wages, and the money must reach the fund within 7 business days. A contribution is on time only if the fund receives it — along with all the information needed to allocate it to the right employee — within 7 business days of paying the employee. If you use a commercial clearing house, you need to allow enough time for it to process the payment. 

Because the payment window has shrunk dramatically — from 28 days after the quarter to just 7 business days after payday — the risk of a clearing house delay pushing a payment past the deadline (the very trap in Ostwald) is now much greater. 

Redesign of the super guarantee charge 

Missing the 7-business-day deadline triggers the newly redesigned SGC. The calculation base has changed and some offsets have been removed: 

The redesigned SGC also includes daily compounding interest and an “administrative uplift” of up to 60%. Employers may be able to reduce this uplift through voluntary disclosure if a payment is missed. 

For directors, the DPN regime and the “lockdown” rules continue to apply to unpaid super. With payroll now happening more frequently, directors need to be especially careful that payroll reporting and super clearing house transfers happen at the same time — to avoid rolling personal liability. 

Need Help?

Our team at WLF Accounting & Advisory are here to help, contact us today – HERE