SG Amnesty: How to Avoid Superannuation Penalties
Updated: Apr 20, 2020
Update: ATO offers superannuation guarantee amnesty COVID-19 payment plans
ATO acknowledged that employers affected by COVID-19 may not be able to pay their liability and it will work with employers to establish a payment plan that is flexible to help assist them in making payments.
These arrangements include: - Flexible payment terms and amounts which will be adjusted if circumstances change; and the ability to extend payment plans to beyond 7 September 2020, the end of the amnesty period (only payments made by 7 September 2020 will be deductible).
- Employers unable to maintain payments after this time may be disqualified from the amnesty and relieved of its benefits.
The ATO will only apply the disqualification to any unpaid quarters; and advise employers which quarters are unpaid (in such instances it will re-apply the administration component of $20 per employee included in the disqualified quarter); and take into consideration whether special circumstances apply when deciding whether a Part 7 penalty should be applied to a disclosure (potentially resulting in the penalty being reduced to nil).
Despite the impact of COVID-19 on employers, the ATO has confirmed that there will be no extension beyond 7 September 2020 to make voluntary disclosures to receive amnesty benefits. Read more about these updates HERE
Are you up to date with all your Superannuation payments?
On Monday 24th February the Recovering Unpaid Superannuation or Superannuation Guarantee Amnesty bill has been passed and is now awaiting royal assent.
If you haven’t heard of the Superannuation Guarantee Amnesty bill yet and you are an employer, then you need to be across this.
What you need to know
The proposed legislative amendments into Parliament was announced by Senator Jane Hume, Assistant Minister for Superannuation, Financial Services and Financial Technology.
The Senator’s media release states that since the Amnesty was initially announced on 24 May 2018, over 7,000 employers that were eligible for the original Amnesty have voluntarily disclosed historical unpaid SG, and the ATO estimates that an additional 7,000 employers will come forward due to the extension of the Amnesty. It is expected that around $160 million of SG will be paid under the Amnesty.
The introduced bill proposes to give employers, who have historically underpaid super contributions on behalf of employees, the opportunity to make disclosures and avoid super guarantee penalties during a one-off amnesty period.
If an employer fails to pay the minimum amount of superannuation, they may have to pay a Superannuation Guarantee Charge to the Australian Tax Office.
The Superannuation Guarantee Amnesty (let’s call it SG Amnesty so it’s less of a mouthful) provides for a one-off amnesty to encourage employers to self-correct their historical SG non-compliance dating from 1 July 1992 to the 31st March 2018.
The amnesty period will start from 24 May 2018 and end six months from the date it receives royal assent. This means, where an employer has already made disclosures to the ATO during the previously announced amnesty period that was never legislated (that is, from 24 May 2018 to 23 May 2019), they’ll benefit from the penalty remissions provided in the new legislation.
Senator Jane Hume, Assistant Minister for Superannuation, Financial Services and Financial Technology want to be clear that employers will not be let off the hook “If employers do not take advantage of the amnesty, they will now face significantly higher penalties when they are caught. In addition, throughout the amnesty period the ATO will still continue its usual audit and enforcement activity against employers for historical obligations they do not own up to voluntarily.
We encourage employers to check they don’t owe outstanding super – and if they do, to take advantage of this once-only opportunity to set things right before much tougher penalties apply.”
What you need to do.
Under the SG Amnesty, an employer who makes any voluntary disclosures during the amnesty period:
- Will be able to claim a tax deduction for their superannuation guarantee charge (SGC) liability during the Amnesty period
- Can pay the unpaid superannuation directly to the employee’s own super fund, rather than through the ATO
- Can receive remission of the administration fee component of the SGC liability (such as $20 per employee, per quarter)
- Will receive a remission of any Part 7 penalties for failure to lodge an SGC statement (for example, this penalty can be up to 200% of the SGC).
SG shortfalls relating to quarters commencing on 1 April 2018, normal rules apply (as in, the super contributions won’t be deductible, while administrative fees and Part 7 penalties will also be imposed).
There is a limited time to take advantage of this one-off amnesty (six months from the date of royal assent), employers with unreported SG liabilities should obtain advice and consider making voluntary disclosure today.
Even if you feel that you have been compliant it would be advisable to check with whoever manages your payroll that all payments have been met.
Remember the superannuation payment for all employees is due 21 days after the end of the quarter.
If you are a new business or just find all of this a bit daunting, there are some helpful information links for you here:
The ATO Missed and Late Payments section which explains the Super guarantee charge, payments and how to lodge a Superannuation guarantee charge statement - Click Here
The Fair Work Ombudsman site has a ‘Small business best practice guide’ which explains minimum employment conditions, record-keeping, payslips, unfair dismissal laws and other responsibilities. There is also information on how to conduct a self-audit of your business - Click Here