Running a business and managing employees and cash flow can be a tough task for business owners. Many businesses with employees have historically struggled to meet their superannuation guarantee (SG) obligations on time or at all. Those that do struggle to meet their obligations on time, have been put off making any late contributions by the time-consuming forms and harsh penalties imposed by the Australian Taxation Office. As such, on the 18 September 2019, the Government introduced the Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019 (the Bill) to allow employers to self-correct any unpaid SG amounts under a once-off SG Amnesty.  

Under the current system, Employers are required to pay 9.5% of an employees’ ordinary time earnings by the 28^th day of the month after each quarter. If not paid on time, the following conditions apply:

• A superannuation Guarantee charge statement is required to be prepared and lodged with the ATO
• Payment is required of the SG shortfall, with interest, plus a $20 administration fee per employee
• The loss of the Super Guarantee payments as a tax deduction

In addition, if the employer has failed or refused to provide a statement in respect of SG shortfalls they may also be liable or Part 7 penalties which can be up to 200% of the underlying SG amount.

With the above conditions, it’s no wonder that some employers would prefer to stick their heads in the sand rather than deal with extra work and expense in order to make good on their obligations.

As such the Proposed Bill, offers a once-off amnesty for employers. It will apply from 24 May 2018 until 6 months after the Bill receives Royal Assent. It is important to note that the Amnesty will only apply to unpaid superannuation from 1 July 1992 until 31 March 2018. In order to qualify for the Amnesty, the employer must not have been investigated by the ATO for the financial quarter in question. As long as the unpaid super is disclosed to the ATO in the approved form (and must not have been previously disclosed) the following benefits will apply:

• No administration charge
• A once off tax deduction for the SG shortfall
• Remission of Part 7 penalties

Under the proposed Bill, if employers do not come forward to claim the amnesty and are later caught, the commissioner will not be able to remit any Part 7 penalties below 100% of the SG payable, unless there are exceptional circumstances.

Although the Bill has yet to receive Royal Assent, all employers should be taking steps to ensure their SG obligations are met. For any SG amounts owed prior to 31 March 2018 the amnesty could be just the ticket to get everything up to date whilst also avoiding penalties, with the added bonus of a tax deduction for any superannuation paid. 

Written for you by Stephen Imms