August 26, 2020
What is the Super Guarantee Amnesty?
The time to act is now.
Many are aware that unpaid superannuation guarantee shortfall creates significant issues for employers and employees alike. For employers, unpaid superannuation guarantee shortfall puts the employer at risk of:
- penalties of up to 200% of the shortfall;
- an administration charge for each employee they have a shortfall for; and
- interest on the above; and
- directorial liability.
Through our experience, we can say the effect of unpaid superannuation guarantee shortfall has on employers can be devastating to a business. For employees, unpaid superannuation affects their retirement nest egg that they expect their employer to be contributing to, and as a result, the impact can be similarly catastrophic.
The superannuation guarantee amnesty is a once off scheme that affords employers the opportunity to pay unpaid superannuation guarantee shortfalls that fall during the period 1 July 1992 and 31 March 2018 and for those amounts to:
- be deductible;
- not be subject to administration charges or penalties.
The superannuation guarantee amnesty scheme is a win for employers who were worried to report unpaid superannuation guarantee shortfalls and a win for employees.
Employers are running out of time to access the superannuation guarantee amnesty is a once off scheme, amnesty closing at 11.59 pm on Monday 7 September 2020.
The time to act is now.
What should you do?
Any employer seeking to take advantage of the super guarantee amnesty is required to
lodge a SG amnesty application form with the ATO by 11:59pm on Monday 7 September 2020.
Many employers are worried that they will not be eligible for the super guarantee amnesty if they are unable to pay their liability by the due time, this concern has been heightened by the affect COVID-19 is having on our community. The ATO is able to establish payment plans to deal with any superannuation guarantee shortfalls that qualify for the super guarantee amnesty.
REMEMBER THAT NOT ALL QUARTERS ARE ELIGIBLE FOR THE AMNESTY
For a quarter in which a taxpayer has a super guarantee shortfall, the quarter may be eligible for the super guarantee amnesty where:
- the quarter that the taxpayer is applying in relation to must between 1 July 1992 and 31 March 2018;
- the super guarantee shortfall has not previously been disclosed; and
- the taxpayer’s super guarantee shortfall is neither currently or has previously been subject to audit.
Where the eligibility criteria for the amnesty are not satisfied, early disclosure of an unpaid superannuation guarantee shortfall may benefit employers in a number of ways, which include:
- the ATO may apply a lower penalty to the shortfall;
- late payments may be able to be used to offset shortfalls in periods;
- the ATO may allow the employer to enter into a payment plan for the liability;
- avoid a director penalty notice being issued.
HOW WILL THE ATO DEAL WITH SHORTFALLS AFTER THE AMNESTY IS ENDS?
On 30 July 2020 the ATO issued ‘PS LA 2020/D1: Remission of additional superannuation guarantee charge.’ This (albeit draft) Practice Statement provides for the principles that the ATO should apply in considering whether to remit penalties in relation to the super guarantee charge, including in respect of shortfalls that could have been disclosed during the amnesty period.
We recommend that employers bear this Practice Statement in mind once the amnesty period has ended, as this Practice Statement highlights that the ATO is unlikely to show leniency in relation to the remission of penalties on shortfalls that occurred during the period 1 July 1992 and 31 March 2018. In particular, it is stated in the Practice Statement that ‘we will take a very strict approach to penalties where an employer could have come forward voluntarily to disclose an SG shortfall and failed to do so.’
HOW CAN MCINNES WILSON LAWYERS HELP?
- Reviewing an employer’s compliance with their superannuation obligations.
- Making disclosures to the ATO of any shortfalls, both in reliance on the amnesty, or otherwise.
- Managing superannuation guarantee audits and objecting to default assessments.
- Negotiating payment plans for unpaid superannuation shortfall with the ATO.