The long-awaited superannuation guarantee amnesty passed Parliament late last month.
Employers who have fallen behind with their SG payments now have 6 months to ‘self-correct’ under the amnesty. But, with the amnesty comes additional penalties if employers fail to take advantage of this one-off opportunity.
The Bill containing the one-off superannuation guarantee (SG) amnesty has finally passed through Parliament and awaits Royal Assent.
The amnesty only relates to SG liabilities arising in relation to quarters up to the March 2018 quarter.
In broad terms, the SG amnesty allows:
- Tax deductibility – employers to claim tax deductions for payments of SG charge (SGC) amounts made during the amnesty period (from 24 May 2018 until 6 months after the Bill receives Royal Assent). Ordinarily no deductions can be claimed for payments relating to the SGC.
- No administration fees or penalties – employers will not be subject to the quarterly administration component of the SGC and penalty amounts will generally be reduced as well. However, the nominal interest component will still need to be paid as this represents compensation for the relevant employees.
If employers do not take advantage of the amnesty, the additional penalty that can be applied to unpaid SG amounts will be set at a minimum rate of 100% of the shortfall. That is, failing to take advantage of the amnesty means that if problems are detected by the ATO later, then no deductions will be available for the amounts that end up being paid, the SGC amount will be higher, and an automatic minimum penalty amount will apply (the Commissioner could potentially increase the penalty amount).
Given the complexity of the SG system and the limited period of time to take advantage of the amnesty, it is important for practitioners to raise this with all clients who could potentially have historical SG issues. This would be particularly important for businesses who have used contractors as part of their workforce as distinguishing between employers and contractors can be difficult.