Super Guarantee Amnesty
23 May 2020
Amidst everything that has been happening in Australia since COVID-19, the Super Guarantee Amnesty finally came into effect with The Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019 receiving Royal Assent.
The amnesty provides employers with an opportunity to self-correct historical superannuation guarantee (SG) non-compliance, without incurring the administration component or penalties. The amnesty period applies from the 24th May 2018 to 7 September 2020.
Ordinarily, where an employer fails to pay an employee’s super on time, the employer will be required to lodge a Super Guarantee Charge (SGC) statement and pay the SG charge on any SG shortfall amounts.
The SGC is made up of:
- SG shortfall amounts;
- Interest on those amounts;
- An administration fee of $20 per employee per quarter.
Additionally, if any employer lodges their SCG statement late, they are also liable for a “Part 7” penalty. This penalty is paid on top of the SGC that employers owe, with the maximum penalty being 200% of the SCG amount. The Commissioner of Taxation currently has the power to remit all or part of the penalty payable.
No part of the SCG payment or penalties is tax deductible.
The amnesty arrangements
During the amnesty period, eligible employers who apply to self-correct historical SG non-compliance for any quarter between 1 July 1992 to 31 March 2018 will be exempt from the administration component and Part 7 penalties associated with late payments of SG, and will only be required to pay unpaid super contributions and interest on those amounts. Additionally these SGC payments will be tax deductable, provided they are paid before 11.59pm 7 September 2020.
To be eligible for the amnesty you must meet and fulfil all the following criteria.
- Have not been informed the ATO is examining or intends to examine your SG obligation for the quarter(s) your disclosure relates to;
- Disclose an SG shortfall for an employee that you haven’t already disclosed to us (or disclose additional amounts of SG shortfall for a quarter previously disclosed);
- Disclose for quarter(s) starting from 1 July 1992 to 31 March 2018.
- Lodge your completed SG amnesty form with the ATO so they receive it no later than 7 September 2020.
In order to apply for the amnesty, an employer must apply using the approved form. The form is available HERE.
The employer must also pay the amount owing in full to the ATO by 7 September 2020, or enter into a payment plan with the ATO by that date. Please note that only payments made on or prior to 7 September 2020 will be deductible. For example, if you enter into a payment arrangement with the ATO, only those payments you make prior to that date will be tax deductible.
The ATO will be continuing their usual audit and enforcement activity during the amnesty period, and if the ATO identifies that an employer has a SG shortfall amount during the amnesty period but before the employer has come forward, the employer will not qualify for the concessional treatment under the amnesty.
Increased penalties after the amnesty period ends
As noted above, the Commissioner can currently remit all Part 7 penalties, reducing the penalty amount to nil. After the amnesty period ends, the Commissioner’s ability to remit penalties (Part 7 penalty) below 100% will be restricted to very limited circumstances. Therefore, any employer who has a SG charge will be subject to a penalty of at least 100% of the SGC amount.
When the ATO remits any unpaid SG amnesty contributions to an employee’s super account, the employee will be able to apply to the ATO to have that contribution exempted from the contribution caps. This concession will not apply if an employer pays the amnesty contributions directly to the employee’s super fund. It is therefore important that if you are taking advantage of the amnesty, you pay any SG amounts to the ATO as directed.
Disclosures of unpaid SG between 24 May 2018 and 6 March 2020
If you previously disclosed unpaid super guarantee amounts to the ATO in anticipation of the SG amnesty, you don’t need to lodge again or apply on the SG amnesty form. The ATO have advised that they are reviewing all disclosures received between 24 May 2018 and 6 March 2020 to determine eligibility for the amnesty arrangements.
If a business owner wishes to take advantage of the superannuation guarantee amnesty arrangements, but is concerned their circumstances may change and they will not be able to pay the liability, they should call the ATO to discuss their payment plan options. If a business owner has already applied for the SG amnesty and are now experiencing difficulties in keeping up with a payment plan, they should also call the ATO to discuss their options.
The ATO has further details on the superannuation guarantee amnesty, including additional information on the amnesty itself, how it operates and how to apply for the amnesty, available on their website. This can be found HERE.