In Brief
- Pay Outstanding Super and Claim Deductions
- Amnesty will only run for 6 Months
- Employers can apply for an exemption from normal SG penalties
- Higher penalties will apply once the amnesty period end – Minimum 100% – 200% penalties after amnesty and NO DEDUCTIONS
What does this mean for your business?
If you are an employer and have fallen behind in your superannuation guarantee (SG) obligations, you will have 6 months to “self-correct” under a new amnesty passed through parliament this month.
Qualifying for the amnesty
The amnesty applies to employers that have underpaid or not paid SG for any period from 1 July 1992 up to 31 March 2018.
Normal SG penalties for late payment
Employers pay:
- The SGC comprised of:
o The outstanding SG entitlements – although this component might be higher than what it would have been had the entitlements been paid on time
o Interest of 10% per annum
o An administration fee of $20 per quarter for each employee with a shortfall
- Penalties of up to 200% of the amount of the underlying SG charge
- A general interest charge if the SGC or penalties are not paid by the due date
In addition, if the SG payment is made late, it cannot be deducted even if the outstanding payment is brought up to date.
Payment deadlines
Generally, SG contributions are due 28 days after the end of each quarter:
- 28 October – September quarter
- 28 January – December quarter
- 28 April – March quarter
- 28 July – June quarter
Who is eligible to apply for the amnesty?
An employer may be eligible to apply for the amnesty if:
- They were not given notice that the ATO would be examining their SG compliance for the quarter
- They have not been previously disqualified from participating
If an eligible employer has the capacity to pay on the day of their amnesty application they may choose to make contributions to the SG shortfall.
Under the amnesty – “One-Off Opportunity to Catch-up and Claim Deduction”
Employers pay:
- The SGC:
o The outstanding SG entitlements
o Interest of 10% per annum
o No administration fees
- No penalties
- A general interest charge
Another advantage of using the amnesty period to catch up is that the SGC amount is deductible. The ability to deduct SGC and the reduction in penalties could be significant for employers that have fallen behind with their SG obligations.
Special provisions within the legislation automatically protect employees from inadvertently breaching concessional contribution cap limits if the unpaid SG is paid to the Commissioner and then transferred to the employee’s superannuation fund. If the employer makes the payment directly into the employee’s fund, the individual will need to make a request for the Commissioner to exercise discretion and either disregard the concessional contributions or allocate them to another financial year.
After the amnesty: Minimum 100% to 200% penalty and no deductions – NO EXCEPTIONS
If SG contributions aren’t made and an SG Charge isn’t submitted on their due dates or during the amnesty period, the same five non-tax-deductible penalties will apply. An important point thing to note here is that the ATO-imposed penalties must be between 100% and 200% of the liability.
Further penalties can be applied for false or misleading statements.
What remuneration measurement is typically used?
For most employers this is based on Ordinary Time Earnings which often includes different metrics to Salary and Wages.
See ATO’s Checklist
Over time the SG percentage has changed. It was initially 3% of OTE for smaller employers and 4% for larger employers. It is now 9.5% for all employers.