Tax Insight – Superannuation Amnesty

05 June 2018

On 24 May, the Government announced a Superannuation Guarantee Charge amnesty (Amnesty) to encourage employers to voluntarily disclose non-payment of their employees’ compulsory superannuation contributions (Contributions).

The Amnesty commenced on 24 May 2018 and will be available until 23 May 2019.

I’m an employer and have missed payments of my employees’ Contributions. How am I currently treated?

Currently, employers who have missed payments of their employees’ Contributions are liable to pay an amount to the Commissioner of Taxation (ATO) equivalent to:

  • The shortfall of any Contributions;
  • Interest to compensate an employee for forgone investment returns; and
  • Administrative fees.

Employers may also be liable for penalties of up to 200% of any shortfall, and, are denied a tax deduction for amounts they are required to pay to the ATO. Finally, the General Interest Charge (GIC) may be imposed on any payments to the ATO which are late.

What is the Amnesty all about?

The Amnesty offers a significant opportunity for employers to bring all their employees’ Contributions up to date. Employers can now do so without the burden of penalties which may have made previous disclosures prohibitive.

Employers who voluntarily disclose details to the ATO of the Contributions they have missed may be eligible to participate in the Amnesty. Under the Amnesty,

  • All fees and penalties which would ordinarily apply to shortfalls are reduced to nil; and
  • Employers will be allowed to claim a tax deduction for the Contributions and interest they pay to their employees. Employers may wish to consider making a voluntary disclosure and payment to the ATO before 30 June 2018 as part of their end of financial year tax planning.
Am I eligible to participate in the Amnesty?

Employers are eligible to participate in the Amnesty if they:

  • Have missed a Contribution during at least one quarter between 1 July 1992 and 31 March 2018;
  • Voluntarily disclose their circumstances for the first time to the ATO before 23 May 2019; and
  • Make all Contributions and interest payments to their employees’ superannuation account, or, the ATO. Whether a payment is made directly into an employee’s superannuation account or the ATO will depend on the circumstances.

Employers who are currently under review for non-compliance with the superannuation law may not be eligible to participate in the Amnesty.

What if I don’t make a voluntary disclosure or I can’t afford to pay employees’ Contributions right now?

Government expects employers to take advantage of the Amnesty to bring their employees’ Contributions up to date. In future, the ATO are expected to apply penalties of a minimum of 50% against eligible employers who don’t make a voluntary disclosure as part of the Amnesty.

The ATO is also able to accept payment arrangements from employers who wish to take advantage of the Amnesty.

How we can assist

HWL Ebsworth’s national tax team can assist and advise employers to conduct an internal review of their compliance with superannuation law prior to closure of the Amnesty period on 23 May 2019. We can also engage with the ATO to submit voluntary disclosures under the Amnesty on a client’s behalf, well in advance of this time as required.

This article was written by Leon Gorr, Partner, Nima Sedaghat, Partner, Johnny Ho, Partner, Vincent Licciardi, Senior Associate, Travis McCarthy, Solicitor and Verity Gresswell, Law Graduate.

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