What the Superannuation Guarantee Amnesty Could Mean for Your Business
The Government has recently announced it is offering a 12-month amnesty period to employers who have underpaid their employee’s superannuation entitlements.
Small businesses in the building and construction industry often feel the pressure of tight cash flows, and underpaying (or delaying payment) of employee superannuation can be a temptation. However, not paying your employees their legal entitlements is not an option.
The amnesty encourages employers to voluntarily disclose and pay their superannuation guarantee shortfalls, in return for the slate to be wiped clean before the introduction of Single Touch Payroll across all businesses in July 2019.
The amnesty will apply to employer superannuation guarantee shortfalls between the periods of 1 July 1992 to 31 March 2018. However, shortfalls from 1 April 2018 will not be eligible for amnesty.
Subject to passage in Parliament, the amnesty will be in effect from 24 May 2018 to 23 May 2019.
Benefits of the Amnesty:
Employers who voluntarily disclose their superannuation shortfalls and pay the full amount during the amnesty period will benefit by:
Not having to pay the $20 per employee, per period, administration fee;
Part 7 Penalties will not be applied; and
All catch-up payments made between 24 May 2018 to 23 May 2018 will be tax deductible.
How Can I Access the Amnesty?
To access the amnesty, you must have a superannuation guarantee shortfall between 1 July 1992 and 31 March 2018, not have these shortfalls be subject to an ATO Audit.
If you can pay the full amount owing:
Pay the outstanding superannuation shortfalls (and nominal interest) to the employees nominated superannuation account; and
Lodge the SG Amnesty Fund Payment Form to the ATO.
If you cannot pay the full amount owing:
Lodge the SG Amnesty ATO Payment Form to the ATO; and
Pay the amount owing to the ATO (a payment plan may be possible).
What Will Happen if I Do Not Come Forward?
The consequences of not voluntarily disclosing your superannuation guarantee shortfalls during the amnesty period will be tough. After the amnesty period, a minimum penalty of 50% of the Super Guarantee Charge will be applied to employers who could have come forward during the amnesty period.
The ATO will continue its usual compliance activities during the amnesty period. This means you could come under an audit and become ineligible to benefit from the amnesty during the amnesty period.
Passage in Parliament
The proposed amnesty is currently not enacted but is designed to be applied retrospectively if it passes through Parliament.
If the amnesty does not progress through Parliament, the conditions of the amnesty will revert to the current system. Payments made during the period will not be tax deductible, the administrative component of the SGC will need to be paid, and Part 7 Penalties may apply.
This information is not to be relied upon without speaking to your accountant, tax agent or financial adviser depending on the advice.