The Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019 has been passed by both Houses of Parliament and now awaits Royal Assent.
The superannuation guarantee (‘SG’) amnesty first announced on 24 May 2018 provides employers who have underpaid (or paid late) compulsory employee superannuation to make disclosure with the following concessions:
- No administrative penalty ($20 per employee per quarter) where the shortfall was identified because of disclosure under the amnesty;
- No Part 7 penalties (up to 200% of the liability) in respect of SG shortfall amounts that qualify for the amnesty;
- The ability to claim the payment of the SG charge, or contributions offset against the SG charge as a tax deduction.
Employers are still required to pay the nominal interest on non-compliant SG contributions to ensure employees are not disadvantaged. The SG amnesty is not available where the Australian Taxation Office has already informed the employer that they are, or are about to, review the employer’s SG compliance.
Employers who identify historical SG non-compliance for the period 1 July 1992 to 31 March 2018 will have six months from the date the Bill receives Royal Assent to disclose information relating to the SG shortfall to the Commissioner. The disclosure must be in the approved form, this is expected to include an SG statement.
What SG shortfall amounts are covered?
Contrary to popular belief, the amnesty is not designed to assist recalcitrant employers who have knowingly or deliberately engaged in compulsory SG non-compliance. The amnesty covers inadvertent shortfalls including (but not limited to):
- Late payments due to administrative error or internet/banking issues;
- Payments deemed to be non-compliant as they were paid by the employer on the 28th day of the month, but not received by the employee’s fund and applied against their member account until after that date;
- Payments made to a superannuation clearing house before the due date but not processed by the clearing house on time;
- Shortfalls due to inadvertent errors in interpreting awards, determining ordinary time earnings.
Employers are advised to take action now as it may take some time to review historical SG records and identify non-compliance. Completing the necessary quarterly SG charge forms may also pose a challenge, particularly with the complexities around determining payment dates and offsetting other contributions.
If you have already made disclosure under the amnesty, we recommend you contact the ATO to request a refund of any administration fees or penalties paid. You may also need to amend prior period income tax returns to claim a tax deduction for the eligible SG paid.
Employers are cautioned: the Commissioner does not have the power to remit Part 7 penalties below 100% of the SG charge payable for a historical quarter covered by the amnesty where the employer fails to disclose the shortfall under the amnesty, so action must be taken now.
For more information
If you require assistance in reviewing historical SG compliance or making the required disclosure to the ATO, contact your local RSM office who will be able to provide you with further assistance.