Super Guarantee Underpayments – Employer Amnesty

“The ATO estimates that in 2014-15, around $2.85bn in SG payments went unpaid…while this represents a 95% compliance rate, any level of non-compliance is unacceptable”.

The amnesty applies to SG shortfalls as far back as 1 July 1992 but will not apply to shortfalls for quarters starting from 1 April 2018. Therefore, if your business inadvertently forgot to make SG payments for an employee during this period, you may be able to take advantage of the amnesty. To qualify for the amnesty, a disclosure must be made to the ATO in the approved form and must not have been previously disclosed.

Employers who take advantage of this amnesty will still need to pay all SG shortfall amounts owing to their employees, including the nominal interest and general interest charge (but not the administrative component). However, any SG charge payments and offsetting contributions made during the amnesty will be tax deductible for the employer.

According to the Government, those employers that do not take advantage of this amnesty will face higher penalties when they are subsequently caught. In general, a minimum 50% penalty on top of the SG charge that is already owed will be imposed. Additionally, a penalty of 200% of the SG shortfall amount may also apply for failing to lodge a SG statement on time. This is all on top of the SG charge payments and offsetting contributions not being deductible outside the amnesty period.

As a part of the carrot and stick approach the Government is taking, during the amnesty, the ATO will continue its usual enforcement activity against employers with historical SG obligations that don’t own up voluntarily. In addition, the Government is also seeking to give the ATO more tools to enforce compliance going forward including:

• giving the ATO the ability to seek court-ordered penalties in cases where employers defy directions to pay their superannuation guarantee liabilities, including up to 12 months jail in the worst cases of non-payment;
• requiring super funds to report contributions received at least monthly to the ATO which will enable the ATO to identify non-compliance and take prompt action;
• rollout of Single Touch Payroll (STP) to all employers by 1 July 2019 which will align payroll functions with regular reporting of taxation and superannuation obligations; and
• improving the effectiveness of the ATO’s recovery powers, including strengthening director penalty notices and use of security bonds for high-risk employers, to ensure that unpaid superannuation is collected by the ATO and paid to employees’ super accounts.