Failure to Pass the Superannuation Guarantee Amnesty into Law
March 12, 2019
The Superannuation Guarantee Amnesty has failed to pass into law and this has lead to a major problem for employers.
A 12 month Superannuation Guarantee Amnesty (the Amnesty) was announced on 24 May 2018. The Amnesty is a one-off opportunity for employers to self-correct past super guarantee (SG) non compliance without penalty.
To be eligible for the Amnesty you must:
voluntarily disclose amounts of SG shortfall for any period from 1 July 1992 up to 31 March 2018 within the 12-month Amnesty period – between 24 May 2018 and 23 May 2019;
disclose amounts of SG shortfall that have not previously been disclosed;
not be subject to an audit of your SG for the relevant periods.
Employers who voluntarily disclose previously undeclared SG shortfalls during the Amnesty and before the commencement of an audit of their SG will:
not be liable for the administration component of the super guarantee charge (SGC) and penalties that may otherwise apply to late SG payments;
be able to claim a deduction for catch-up payments made in the 12-month period.
The government’s announcement of the amnesty prompted many hundreds – mostly smaller – businesses to come forward on the expectation that the government’s stated position in its announcement would come into force. However the amending legislation did not pass parliament and as a result many employers have been left in the lurch after coming forward with the expectation of enjoying the benefits of the amnesty.
The ATO has now published its position. The ATO states that until the proposed amendments to the legislation are made law, the ATO will treat employers as though as they have made voluntary disclosures and deal with these under the existing rules. It will however use what discretion it is afforded under those rules to waive penalties for employers that came forward under the impression they were applying for the amnesty. Under the current law superannuation paid late and CG charge that must be paid to the ATOP are not tax deductible.
Josh McMullen, Tax Writer at PT Partners in Brisbane says “The current rules (such as denying deductions for late contributions) are hard-wired into legislation, and therefore can’t be changed/waived/varied by the ATO without amending legislation. The ATO has only very limited discretion to remit any part of the superannuation guarantee charge.” This is made up of:
an admin fee of $20 per employee for which there has been a shortfall
the SG charge being not deductible
further penalties may be imposed for failure to keep records and other offences.
Josh states that “a defining characteristic of the current penalty framework is the lack of discretion it afford the ATO.” By contrast, the first four components are automatic, and are “hard-wired” into legislation. Only the fifth component is subject to ATO discretion.