Employers Act Now – one off opportunity to self-correct underpayment of super or super guarantee issues before tougher penalties apply.

The Superannuation Guarantee Amnesty Bill that received Royal Assent on 6th March 2020 is nearly at the end of the 6 month window of opportunity for employers to self-correct any historical superannuation underpayment issues. The final date for accessing the amnesty is 7 September 2020.

Despite the massive impact that COVID-19 has had on businesses and employers, the ATO have advised that they will not extend this deadline and therefore any employers with unpaid, short paid or late paid superannuation issues should review their records as soon as possible.

The Superannuation Guarantee (SG) Amnesty provides employers with a one-off opportunity to make a voluntary disclosure of any unpaid superannuation contributions that occurred between 1 July 1992 and 31 March 2018.

The amnesty is a last chance for employers. If a taxpayer doesn’t take advantage of the amnesty in relation to historical shortfalls, they will be subject to a penalty of up to 200%. The Commissioner will lose the power to remit that penalty below 100% for historical quarters.

Employers must report no later than 7th September 2020 in order to take advantage of the beneficial treatment provided under the amnesty.

Amnesty Period

Any employers who have already made voluntary disclosures since 24 May 2018 will benefit from the penalty remissions in the new legislation.

The amnesty period begins on 24 May 2018 and end six months after the date the legislation receives royal assent (7 September 2020). This provides a limited time for employers to make any relevant disclosures.

Benefits

An employer who makes a voluntary disclosure during the amnesty period will benefit from the following:

  • Ability to claim a tax deduction for superannuation guarantee charge (SGC) liability during the amnesty period – normally these payments are not deductible.
  • May receive a remission of the administration fee included in the SGC liability (normally $20 per employee, per quarter).
  • Will receive a remission of penalties for failure to lodge an SGC statement (for example, this penalty can be up to 200% of the SGC).
  • Can pay the unpaid superannuation directly to the employee’s own super fund, rather than through the ATO.

It is important to note that any payments made after the end of the amnesty period (7th September 2020) will not be eligible for a tax deduction. Businesses need to consider this as part of their voluntary disclosure.

Eligibility to access the Amnesty

To qualify for the amnesty, the disclosure must:

  • Be made before the end of the amnesty period (7th September 2020)
  • Be made in the approved form (this will generally include the superannuation guarantee charge statement)
  • Relate to the March 2018 and earlier quarters (importantly, quarters within the amnesty period are not eligible for the amnesty); and
  • Be made before the ATO advises of any review or audit of super guarantee charge obligations

Importantly, for SG shortfalls relating to quarters commencing on 1 April 2018, normal rules apply (i.e. the super contributions won’t be deductible and administrative penalties will also be imposed).

We have seen a substantial increase in ATO audit activity in this area in recent times. Given that the amnesty is nearing the end of the time frame to make a disclosure and pay any outstanding superannuation guarantee obligations, we recommend that businesses review their records urgently to determine if a potential liability exists.

Please contact our office if you require any assistance with reviewing your superannuation obligations or believe you have a shortfall that needs to be disclosed.

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