Find out what the Super Guarantee Amnesty means for you.
After the original amnesty failed to pass parliament in May 2018 the government have reintroduced legislation to establish a one-off amnesty for historical underpayments of the superannuation guarantee.
If enacted this will apply from the date of the original amnesty announcement, 24 May 2018 until 6 months after the legislation has passed. This will give employers time to disclose of these super guarantees to the commissioner of taxation including historical underpaid or unpaid for any period to the March 2018 quarter.
To qualify for the amnesty, employers must voluntarily make this disclosure and either pay the full amount owing or arrange a payment plan in which all payments are met otherwise the amnesty will no longer apply.
The ATO continue its compliance activities during the amnesty period and if they make the discovery first, full penalties will apply. The amnesty will also not apply to amounts already identified as owing in which the employer is subject to an ATO audit.
What employers pay for failing to meet SG obligations
|SGC comprised of:||SGC Comprised of:|
|- The outstanding SG entitlements (this component might be higher than what it would have been had the entitlements been paid on time)||- The outstanding SG enititlements|
|- Interest of 10% per annum||- Interest of 10% per annum|
|- An administration fee of $20 for each employee with a shortfall per quarter||- No administration fees|
|Penalties of up to 200% of the amount of the underlying SG charge (minimum 100% for quarters covered by the amnesty)||No penalties|
|A general interest charge of the SBC or penalties are not paid by the due date||A general interest charge|
|SGC amount is not deductible - even if you pay the outstanding amount||A general interest charge|
So, what do employers need to pay under the amnesty?
Under normal circumstances employers pay the super guarantee charge and lodge a superannuation guarantee statement. However, under the quarterly superannuation guarantee, the interest is calculated on an employer’s quarterly shortfall amount from the first day of the relevant quarter to the date when the super guarantee charge would be. If the superannuation guarantee is paid late, special provisions exist within the legislation to automatically protect employees from inadvertently breaching concessional contribution cap limits if the unpaid superannuation guarantee is paid to the Commissioner and then transferred to the employee’s superannuation fund. In the case an employer makes the payment directly into the employee’s fund, the individual would need to apply to the Commissioner requesting the exercise of discretion to either disregard the concessional contributions or allocate them to another financial year.
But what happens if you don’t take advantage of this amnesty?
If you are found to have underpaid employee’s superannuation guarantee penalties up to 200% apply. With the amnesty-imposed legislation however calls for tougher penalties on employers that do not voluntarily correct underpaid or unpaid. The Commissioner therefore loses the power for leniency even in cases where an employer has made a genuine mistake.
So what does that mean for you?
Regardless of if you do not believe that your business has an Super Guarantee underpayment issue, it is worth undertaking a payroll audit to ensure that your payroll calculations are correct, and employees are being paid at a rate that is consistent with their entitlements under workplace laws and awards.
With the introduction of single touch payroll there is going to be a lot more transparency on super and non-compliance with the ATO now able to capture more recent non-payments.
If you need a super health check get in touch with our accounting team to see how we can help you avoid these penalties and stay on track , you can call us direct on 02 9415 1511 or contact us.