The super guarantee amnesty has now become law, which is welcome news for anyone caught up in the complicated compliance rules for late employer super payments. Be aware that the amnesty is for a limited period and timely action is required to be able to participate.
Employers can now voluntarily disclose their historical underpayments of super guarantee and can self-correct these underpayments without incurring the additional penalties that would usually apply. Importantly, employers are also able to claim deductions for super guarantee charge payments or contributions made during the amnesty period. The amnesty applies to super guarantee shortfalls arising for periods from 1 July 1992 to 31 March 2018.
To be eligible for the amnesty, an employer’s completed SG amnesty form must be lodged with and received by the ATO no later than 7 September 2020.
The SG amnesty form is a special form specific to employers wanting to use the amnesty. Submitting a normal Superannuation Guarantee Charge form will not suffice. If an employer cannot pay the full super guarantee charge amount by 7 September 2020, they may be able to enter into a payment plan with the ATO. However, any payments made after 7 September 2020 will not be deductible to the employer.
The amnesty will only apply where an employer comes forward with amounts that have not been previously disclosed to the ATO. If an employer is, or already has been, notified that the ATO will be examining that employer’s super guarantee compliance for a particular quarter, the amnesty will not apply to that quarter.
Super guarantee – context of the amnesty
Super guarantee is the minimum percentage of an employee’s earnings that an employer is obliged to contribute into super. If an employer doesn’t pay the correct super guarantee for their employee into the correct fund by the correct date, the employer will be liable for the super guarantee charge.
The super guarantee charge is made up of:
- super guarantee shortfall amounts;
- interest (currently 10%) on those amounts in lieu of earnings missed; and
- an administration component (which is $20 per employee, per quarter)
Super guarantee shortfalls are reported and rectified by lodging a super guarantee charge statement and making a payment to the ATO.
Furthermore, if the ATO identify underpaid super guarantee amounts for a quarter that was covered by the amnesty but the employer did not disclose, the employer will be liable for a penalty of up to 200% of the super guarantee charge – a penalty remission may be available, but even so the minimum penalty will be 100% of the super guarantee charge. The penalty is called a Part 7 penalty.
Key benefits to amnesty participants
The key benefits of employers making a voluntary disclosure under the amnesty:
- The employer will be able to claim a deduction for super guarantee charge payments and offsetting payments. Outside of the amnesty, these payments are not deductible.
- The administrative component will be waived. Usually, a mandatory administrative component of $20 per employee per quarter applies.
- Part 7 penalties will not apply. The employer would otherwise be liable for an additional Part 7 penalty of up to 200% (on top of the super guarantee charge) for failing to provide an SG statement by the due date.
The employer must still pay all super guarantee shortfall amounts and interest charges on these amounts, regardless of the amnesty.
It is important to remember that once the ATO has already announced an audit or review of an employer’s super guarantee compliance, the employer will lose access to the amnesty for the period being audited or reviewed.
It is also important to know that if a company fails to meet its super guarantee charge liability in full by the due date, each director of the company may become personally liable for director penalties equal to the unpaid amounts.
The introduction of Single Touch Payroll and events-based reporting means the ATO now has more relevant, timely data to identify non-compliance. Employers that may have historical underpayments or late payments of super guarantee should seek help now.
For more information, or to discuss please contact your usual Mazars advisor or alternatively our specialists:
Author: Michael Jones
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