New law offers a 6 month amnesty for unpaid super
On 24 February 2020, the Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019 - also referred to as the Superannuation Guarantee (SG) Amnesty Bill - was passed by both Houses of Parliament.
Once Royal Assent is received, employers will have six months to voluntarily disclose any superannuation guarantee shortfalls to the ATO, in order to qualify for the amnesty.
What does the amnesty mean for employers?
These measures - plus the full implementation of Single Touch Payroll (STP) - provide a strong incentive for employers to self-disclose. The ATO has near real-time data to monitor compliance, so it’s not a question of “if” you’ll get caught - but “when”.
The amnesty allows employers to review their payroll compliance, and to make good on any superannuation guarantee underpayments without penalty.
What are the terms of the amnesty?
Employers must disclose to the Commissioner information relating to superannuation guarantee shortfalls, for any quarter that ends at least 28 days before the start of the amnesty period. The applicable shortfall period covered by the amnesty is from the quarter beginning 1 July 1992 and ends on 31 March 2018.
NOTE: the amnesty is not available for all quarters within the disclosure period - that is, from 1 April 2018 to six months after the date of the Royal Assent.
The amnesty is only covered by new disclosures of superannuation guarantee shortfalls to the Commissioner, and the employer must not have already been under investigation or examination by the Commissioner for non-compliance in this area.
What are the benefits of the amnesty for employers?
Under this amnesty, employers:
- can claim tax deductions for payments up to the amount of the SGC, when made during the amnesty period
- can claim tax deductions for late contributions made during the amnesty to offset the SGC
- will not be subject for the $20 administration charge per employee shortfall
- will not be subject to penalties under Part 7 in respect of amounts of SG shortfall that qualify for the amnesty
Will there be penalties for non-disclosure?
Penalties will apply the day after the amnesty period ends, when the Commissioner’s ability to remit Part 7 penalties is constrained by legislation. Under the changes, the Commissioner will not be able to remit Part 7 penalties below 100% of the amount of SGC payable for the historical quarter covered by the amnesty.
However, the Commissioner still has the discretion to remit penalties where there are:
- exceptional circumstances
- SG shortfalls relating to quarters starting on 1 April 2018 and later periods
- SG shortfalls for historical periods under amnesty, where the employer comes forward voluntarily and is not prompted by ATO compliance activity
What if I breach the concessional contributions cap?
The amnesty could result in employers making additional superannuation contributions throughout the year, which may breach the employee’s concessional contributions cap - which is currently $25,000 per financial year.
The Bill introduced amendments that offer an exception to the requirement for an individual to apply to the Commissioner for a determination to disregard or reallocate a contribution, allowing the Commissioner the initiative to make their own determination in conjunction with making the contribution on behalf of the employer.
Now is the time to conduct a superannuation health check
Superannuation is complex, and it’s easy for employers to get caught out if their systems aren’t accurately calculating the required superannuation guarantee requirements. We recommend that employers consult with experts to conduct a superannuation “health check” in order to ensure compliance, and to avoid the ire of the ATO.
