The Australian Tax Office has announced that the superannuation guarantee (SG) is now legally binding. The ATO has provided a number of supporting resources which may be useful to employers, as well as the application form on their website – available here.
Increased visibility of data has given the ATO a more precise ability to identify any unpaid SG. More frequent reporting requirements from both the ATO and various super funds have contributed to increasing this transparency.
In the events that employers fail to take advantage of the amnesty, they will be subject to significant consequences. Upon the ATO identifying unpaid SG amounts for a quarter that falls during the amnesty’s coverage, employers will be liable not only for their SG shortfall, but also:
- Administrative expenses ($20 per employee per quarter);
- A ‘Part 7’ penalty of up to 200% (at least 100% if remission is applicable);
- Nominal interest (10%); and
- General interest charge (GIC).
In addition to these penalties, employers will be unable to claim a tax deduction for the SGC paid.
From March 6, 2020, businesses were given the one-off opportunity to correct unpaid SG for quarters from July 1, 1992 to March 31, 2018, without incurring administrative costs or penalties. As the amnesty will end on a weekend, employers will have until 11:59pm on September 7, 2020 to disclose, lodge and pay any SG under the exception.
Any payments an employer makes during the amnesty can be claimed as tax deductions. The ATO is also offering to arrange payment plans to accommodate for circumstances in which the amount owed cannot be settled in full during the six-month period. Only payments made prior to the application deadline will be tax deductible.
The amnesty gives employers the opportunity to rectify any mistakes they may have made in the past and do right by their employees. If you have any questions regarding the above or require assistance with your amnesty application, get in contact with your Morrows advisor.