On 24 May 2018, the Government announced the commencement of a 12 month Superannuation Guarantee Amnesty (subject to the passage of legislation) that is a once only opportunity for employers to disclose and pay previously undeclared super guarantee (SG) shortfalls without penalty.
The Amnesty is available from 24 May 2018 to 23 May 2019.
Employers who voluntarily disclose previously undeclared SG shortfalls during the Amnesty and before the commencement of an audit of their super guarantee will:
- not be liable for the administration component of $20 per employee per late period
- not be liable for Part 7 penalties that may otherwise apply to late SG payments; and
- be able to claim a tax deduction for catch-up payments made within the 12-month period
If you enter in to a payment plan with the ATO for your SG payments that extends past 23 May 2019, only those payments made between 24 May 2018 and 23 May 2019 will be deductible.
Employers will still be required to pay all employee entitlements. This includes the unpaid SG amounts owed to employees and the nominal interest, as well as any associated general interest charge.
Eligibility for the Amnesty
To be eligible for the Amnesty you must:
- voluntarily disclose amounts of SG shortfall within the 12-month Amnesty period – between 24 May 2018 and 23 May 2019,
- disclose amounts of SG shortfall that have not previously been disclosed, and
- not be subject to an audit of your SG for the relevant periods.
The Amnesty applies to previously undeclared SG shortfalls for any period from 1 July 1992 up to 31 March 2018. It does not apply to shortfalls in SG accumulated after 1 April 2018.
If you have already been assessed for a period, you can amend a previously disclosed SG shortfall, but only newly-disclosed amounts are eligible.
How to access the Amnesty
To take advantage of the Amnesty between 24 May 2018 and 23 May 2019, you need to:
- Calculate your superannuation guarantee shortfall; and
- Contact your accountant at GeersSullivan to calculate the nominal interest and organise the relevant application forms for submission to the ATO.
Your accountant can provide further advice on participating in the Amnesty, based upon your particular circumstances.
Where you can pay the full SG shortfall amount and the nominal interest you should pay directly to your employees’ super fund. Where you are not able to pay the full SG shortfall amount for a period you should pay to the ATO and contact your accountant about setting up a payment plan.
Impact on employees
When you pay outstanding SG contributions, your employees will receive:
- The SG shortfall amount
- The nominal interest from the start of the relevant period to the date the SG is payable.
- General Interest Charge that accrues on the SG shortfall amount.
Make sure you inform your employees of any SG payments you make to them through the Amnesty as the contributions could result in them exceeding their concessional contributions cap. In this circumstance your employee should contact their accountant to apply to the Commissioner for his discretion to disregard the excess contributions made under the Amnesty.
Contributions made under the Amnesty will not count towards your employees’ income or contributions for Division 293 purposes.
Employers who are not up-to-date with their super guarantee payment obligations who do not come forward during the Amnesty may face higher penalties in the future.
The Part 7 penalty is automatically imposed at 200% of the SGC amount, however this can be partially remitted. The ATO will take into account the employer’s ability to access the Amnesty, generally a minimum penalty of 50% of the SGC will be applied to employers who were eligible for the Amnesty but did not come forward.
Passage of legislation
Legislation to give effect to the Amnesty was introduced into Parliament on 24 May 2018 and is intended to apply retrospectively once enacted.
If the proposed law does not come into effect:
- any contributions and payments made under the Amnesty will not be tax-deductible.
- any self-assessments that anticipated the new law will need to be amended to include the administration component, and you will be required to pay the administration component
- Part 7 penalties will be imposed and may be remitted in accordance with the ATO’s existing remission policies.