With the focus understandably on the impact of COVID-19 at the moment, your opportunity to take advantage of the SG amnesty which were finalised in February 2020 may have been inadvertently overlooked.
Unfortunately, the provisions are part of an enacted amnesty and there is very little possibility of extension to the end date of the amnesty without going back before parliament.
It is therefore vital to review the provisions if they apply to you and act before the six month window for applications close on 7 September 2020. Only relevant payments made by 7 September 2020 will be tax deductible, and once the amnesty period ends, the ATOs ability to remit penalties will be limited. this means that shortfalls will have a minimum penalty of 100% and can be as much as 200%.
As a refresher, we have included our original article detailing the SG amnesty below.
On 24 February 2020, the Senate finally passed the controversial superannuation guarantee (“SG”) amnesty legislation which had originally lapsed at the calling of the last election. The legislation provides for a once off amnesty to encourage employers to self-correct historical SG noncompliance without penalty. Employers will now have six months from royal assent of the legislation to take advantage of the amnesty, giving them until approximately 7 September 2020 to catch up on underpaid employee superannuation.
The amnesty covers the period between 1 July 1992 and 31 March 2018 and will allow employers to review and disclose any shortfall of SG during the amnesty quarters. It allows employers to claim tax deductions for payments of SG charge or for contributions made during the amnesty period to offset SG charge. The ATO will also waive the administrative component ($20 per employee per quarter) and the Part 7 penalty that may otherwise apply in relation to past SG noncompliance. The interest component will still apply. Contributions can be made directly to the employee’s superannuation fund.
The legislation also includes measures which limit the ATO’s ability to reduce penalties for those employers who fail to avail themselves of the amnesty and are subsequently found to not comply. If an employer does not rectify historical SG noncompliance by the due date, a mandated minimum penalty of 100% will apply. This penalty could be as high as 200% though. A very severe outcome for the employer.
It is important to note that subsequent quarters (ie beyond 31 March 2018) are not covered by the amnesty measure and to qualify the ATO must not have already commenced enquiries regarding the employer’s superannuation compliance at any time before the employer’s disclosure. Additionally, from an employee’s perspective, employees will not have these contributions counted towards their $25,000 concessional contribution caps, nor will they be included in Division 293 tax calculations, to ensure they are not disadvantaged by these measures.
Employers should be reviewing their superannuation compliance for the amnesty quarters to ensure any under paid superannuation is identified. When taking advantage of the amnesty legislation, it is important to use the correct pay codes in your payroll software to avoid the shortfalls being identified by the ATO via STP.
If you require clarification in respect of the above, or if you are concerned about your superannuation compliance – current and related to the amnesty quarters – and would like to discuss the matter further, please do not hesitate to contact our office.
DISCLAIMER: This article is intended to provide a general summary only and should not be relied on as a substitute for professional advice.