The uncertainty around the Superannuation Guarantee (SG) Amnesty is finally over with the legislation having passed the Senate on Monday 24 February 2020 and is now awaiting royal assent.
The SG Amnesty provides a one-off amnesty for employers to make a voluntary disclosure of unpaid superannuation contributions relating to the period from 1 July 1992 to 31 March 2018.
The introduction of the Amnesty combined with the implementation of Single Touch Payroll (STP) provides a strong incentive for employers to voluntary disclose unpaid super contributions. Under STP reporting, the ATO has access to near real-time payroll data to assess employers' compliance with SG obligations and will no doubt use this information to take action against employers who are not complying with their obligations.
Benefits of the amnesty
Under the Amnesty, an employer who makes a voluntary disclosure during the Amnesty period:
- will be able to claim a tax deduction for their superannuation guarantee charge (SGC) liability during the Amnesty period;
- can receive a remission of the administration fee component of the SGC liability (i.e. $20 per employee per quarter);
- will receive a remission of any Part 7 penalties for failure to lodge an SGC statement (e.g. this penalty can be up to 200% of the SGC); and
- can pay the unpaid superannuation directly to the employee own super fund, rather than through the ATO.
Amnesty period
The Amnesty period will be extended from the original proposed date of 24 May 2018 and expires six months after the date the legislation receives royal assent. This means that where an employer has already made disclosures to the ATO during the previously announced amnesty period that was never legislated (i.e. from 24 May 2018 to 23 May 2019), will benefit from the penalty remissions provided in the new legislation.
Conditions of the amnesty
Under the Amnesty, employers must disclose to the ATO in the approved form, information related to the amount of SG shortfall for the relevant quarter (i.e. from 1 July 1992 to 31 March 2018).
The Amnesty only applies to underpayments that have not been previously disclosed to the ATO and were made before any notification of an audit or review having commenced.
Where an employer fails to pay or enter into a payment arrangement with the ATO to pay the SGC liability, the benefits of the Amnesty will be lost
For SG shortfalls relating to quarters commencing on 1 April 2018, the normal rules will apply (i.e. the super contributions will not be deductible and administrative fees and Part 7 penalties will be imposed).
Key take-away
As there is a limited window to take advantage of this one-off Amnesty (six months from the date of royal assent), employers with unreported SG liabilities should obtain advice and consider a voluntary disclosure.
