Super guarantee amnesty for employers

The super guarantee amnesty Bill has finally received Royal Assent, which means that the amnesty for employers to come forward to declare any super guarantee (SG) shortfalls will run from 24 May 2018 to 7 September 2020. Under the super guarantee amnesty, employers can self-correct SG underpayments with reduced penalties, and can also claim a tax deduction for payments of SG charge or contributions made during the amnesty period.

The amnesty will apply to historic SG shortfalls as far back as 1 July 1992 up until the quarter starting on 1 January 2018 (inclusive).

To qualify, employers must first disclose the super guarantee shortfall to the ATO in the approved form between 24 May 2018 and 7 September 2020. The shortfall must not have been previously disclosed to the ATO; however, additional amounts of SG shortfalls disclosed during the amnesty period may be subject to beneficial treatment.

Employers must also pay an employee’s full SG entitlement, including the employee’s individual SG shortfall amount, nominal interest and any general interest charge (GIC). Where the employer has the capacity to pay on the day they make the disclosure, they can choose to make contributions directly into an employee’s super account and offset these amounts against their liability for SG charge.

In situations where the employer is unable to pay the amounts to their employee’s super accounts, they will be required to pay the SG charge to the ATO. Those that have difficulty paying by the due date can negotiate a payment plan with the ATO.

For employers that qualify, they will not have to pay the administrative component ($20 per employee per period) for employees that have an individual SG shortfall identified. They will also not be liable for the additional Part 7 penalty (up to 200%) for failing to provide an SG statement by the time they were required to do so.

In addition, employers will be able to claim a deduction for SG charge payments (and offsetting contributions) made on qualifying payments. Note, however, that payments made after the end of the amnesty period will not qualify for a deduction, even if they relate to SG shortfalls disclosed under the amnesty. Similarly, payments made in accordance with a payment arrangement that are not paid until after the end of the amnesty period will not qualify for a deduction.

All this beneficial treatment on offer for employers who have underpaid SG amounts to employees is perhaps not coincidental in timing given the recent revelations of underpayment and wage theft at various big-name businesses. But the amnesty is not just for the big end of town: any small businesses that have inadvertently failed to make super payments on time or have not made super payments due to cash flow difficulties should review their SG compliance status and take advantage of the amnesty where they are able.

Time is ticking on this one-off amnesty and the Federal Government has flagged tougher penalties when it ends. Remember that the ATO has been greater powers to deal with SG non-compliance, including real-time visibility about how much SG employers are paying and up to 12 months jail for non-compliant employers.

If you would like to know more please contact one of our accountants on 07 4639 1099 or come in and see us at 14 Russell Street Toowoomba.