Accountants and advisers will have their hands full over the next few months, helping business clients review their superannuation guarantee compliance status.
Now that the Government’s Superannuation Guarantee amnesty bill has passed, employers will need to work out if they have an issue with SG underpayments, whether they qualify for the amnesty, how they will structure repayments, what deductions they are entitled to under the amnesty and whether their employees will encounter concessional contribution cap issues as a result of receiving payments under the amnesty.
The amnesty bill passed both houses of Parliament on February 24. It will operate for six months after the bill receives assent, which is expected soon.
The amnesty applies to super guarantee shortfalls going back to July 1992 up until the quarter ending 1 January 2018. It does not apply to shortfalls after 1 January 2018.
Under the amnesty employers can self-correct SG underpayments without incurring penalties that would normally apply. The Government has said it will be a once-only opportunity.
Employers can claim a tax deduction for SG payments made during the amnesty period. The SG charge is normally non-deductible.
The Assistant Minister for Superannuation, Jane Hume, says that since the amnesty was announced in 2018, more than 7000 employers have disclosed SG underpayments. She says she expects a similar number to report underpayments over the six-month period of the amnesty.
If employers do not participate in the amnesty and underpayments are detected, they face a minimum 100 per cent penalty on top of the shortfall.
The amnesty is part of a number of measures designed to deal with SG non-compliance, including prison sentences for non-compliant employers and greater tax office powers.
To meet the conditions of the amnesty, employers must pay an employee’s full entitlement, including any shortfall amounts plus nominal interest.
Employers that have difficulty making the payments by the due date can negotiate a payment plan with the ATO. If they fail to pay or fail to make arrangements to pay, they will lose the benefits of the amnesty.
Payments made in line with a payment arrangement that are not paid until after the end of the amnesty period will not qualify for deductions.
It is possible that employees will exceed their concessional contribution cap if they receive payments under the amnesty. The ATO can make a determination to disregard the breach of the cap.
An employer that notified the ATO of a shortfall before 24 May 2018 (the date the amnesty was first announced) will not qualify for the amnesty. They may still qualify if there are additional amounts of shortfall.