The Government in late May, announced a once-off, 12-month Superannuation Guarantee (SG) Amnesty for employers who have paid insufficient SG for their employees in the past and have not yet caught up. Subject to the passage of legislation, the Amnesty will be available for the 12-month period from 24 May 2018 to 23 May 2019.
For an employer, the benefits of the Amnesty are:
- The administration component of the Superannuation Guarantee Charge (SG Charge) is not payable (this is a $20 per employee, per quarter, for whom there is an SG Shortfall)
- Part 7 penalties will not be applied. This can be up to 200% of the SG Charge that is payable (note that SG Charge includes the SG Shortfall that you owe to employees)
All catch-up payments that you make during the 12-month Amnesty period will be tax deductible. The amendments also allow contributions that an employer has elected to offset against SG charge imposed on the SG shortfall disclosed in accordance with the Amnesty to be deducted from an employer’s assessable income. This ensures commensurate benefits are provided for employers who contribute directly to their employees’ funds when disclosing under the Amnesty to the benefits for those who make payments in relation to SG Charge and leave it to the ATO to distribute the amounts to the relevant funds.
By contrast, under the current law, SG Charge paid to the ATO is not deductible, and late contributions that an employer has made to an employee’s superannuation and has elected to offset against their SG Charge liability are also not deductible.
With a Bill to enact the new Amnesty now before the House of Representatives, we can reveal the details are as follows:
- The Amnesty applies to any SG Shortfall from the introduction of SG back on 1 July 1992 to the quarter ending 31 March 2018.
- You must voluntarily disclose amounts of SG Shortfall relating to the above period. Therefore, if an employer has already lodged an SG Charge Statement (and in that Statement disclosed particular SG Shortfalls), then those particular Shortfalls are not eligible for the Amnesty even if the amount of the Shortfall has yet to be paid. Likewise, Shortfalls that the ATO uncovers during current, future, or past audits of the employer are not eligible for the Amnesty. The disclosure of a new Shortfall must come from the employer, and must occur during the 12-month Amnesty period. By way of background, SG Charge Statements and SG Shortfalls operate under a self-assessment model. The ATO are in most cases unaware that an SG Shortfall exists except in the case where an employee lodges a complaint against their employer, or where an SG Charge Statement is lodged by the employer themselves, or the Shortfall is uncovered in an ATO audit. This lack of awareness by the ATO of past employer Shortfalls is why eligibility for the Amnesty rests on the disclosure by the employer of new, undisclosed Shortfalls.
- There is no requirement to actually make a payment to get the benefit of the Amnesty. Rather, you only need to disclose an SG Shortfall. However, where you fail to make a payment during the Amnesty period, you will not receive a deduction for the catch-up payments (which is only available during the Amnesty).
To access the Amnesty, employers or the Advisors must first calculate the amount payable (the SG Shortfall, plus nominal interest) and lodge one of the following forms:
- SG Amnesty Fund payment form (where you wish to access the Amnesty and can pay the amount in full (including nominal interest) direct to an employee’s superannuation fund)
- SG Amnesty ATO payment form (where you wish to access the Amnesty but cannot pay the amount owing in full). If an employer has already lodged an SGC Statement or received an SGC assessment for a quarter, they can only use this form.
Employers need to lodge these completed forms electronically through the Business Portal or McFillin & Partners can lodge on your behalf via the Tax Agent Portal. There is now a radio button on all portals. Information that must be provided:
- Details of Employer
- Number of quarters covered
- Number of employees, (no employee details are required)
- Amount to be paid.
Irrespective of the Amnesty however, all employers should be encouraged to come forward and disclose and pay past shortfalls to get their Superannuation Guarantee affairs in order. The Government is committing more resources to this area – including requiring Superannuation Funds to report more regularly to the ATO (at least once each month) – therefore non-complying employers may be more easily detected going forward.
Please don’t hesitate to contact McFillin & Partners on 07 3263 7030 or firstname.lastname@example.org if you have any questions in relation to the Amnesty.