The Government introduced Treasury Laws Amendment (2018 Measures No. 4) Bill 2018 into Parliament on 28 March 2018 which affects employer superannuation contributions. This Bill introduces very serious consequences for employers who break the law by short changing their employees. The ATO will have access to new enforcement and collection provisions, including strengthened arrangements for director penalty notices. Some of the proposed amendments are to:
- enable the Commissioner of Taxation to issue directions to employers to pay unpaid superannuation guarantee
- undertake superannuation guarantee education courses
- to disclose more information about superannuation guarantee non-compliance to affected employees;
- extend Single Touch Payroll reporting to all employers;
- require more regular reporting by superannuation funds
- strengthen the commissioner’s ability to collect superannuation guarantee charge and pay as you go withholding liabilities
As an employer, specifically as a Director of a company where employer superannuation contributions and obligations have not been met, you may find yourself personally liable for unpaid superannuation. This is because Director penalties can apply to Directors of companies where the company does not meet its Superannuation Guarantee Charge (SGC) obligations.
Proposed Superannuation Guarantee Amnesty
The Government introduced Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2018. The Bill makes numerous amendments to superannuation and related tax laws, including to encourage the recovery of unpaid Superannuation Guarantee (SG) by introducing a temporary amnesty from late payment penalties for employers who disclose that they have underpaid SG in the past.
It is estimated that in 2014-15, around 2.85 billion in SG payments went unpaid. Of particular concern is that this estimate only relates to one income year!
The Bill complements measures proposed in Treasury Laws Amendment (2018 Measures No. 4) Bill 2018 into Parliament on 28 March that seeks to strengthen the penalty regime for SG non-compliance.
The Amnesty is proposed to last for 12 months, commencing on Thursday 24 May 2018 and ending on Thursday 23 May 2019.
The Amnesty applies only to disclosures of previously undeclared SG shortfall amounts that are made during the 12-month amnesty period and the disclosures relate to the quarters starting when the SG regime commenced and all subsequent quarters until and including the quarter starting on 1 January 2018 — that is, the period from 1 July 1992 to 31 March 2018. This is an astonishing 26 years.
The benefits of the Amnesty will not be available for SG non-compliance that occurs on or after 1 April 2018.
When is an employer eligible for the Amnesty?
To be eligible for the Amnesty, an employer must:
- voluntarily disclose SG shortfall amounts, relating to any period from 1 July 1992 to 31 March 2018, within the Amnesty period (24 May 2018 to 23 May 2019);
- disclose SG shortfall amounts that have not previously been disclosed;
- make the payment of the SG shortfall amount during the 12-month Amnesty period; and
- not have been previously informed that the ATO is examining (or that it intends to examine) the employer’s SG compliance for the relevant quarter.
An employer may still qualify for the Amnesty if it has previously made disclosures about an SG shortfall for a quarter but comes forward with information about additional amounts of SG shortfall for that quarter.
The benefits for employers who take part in the amnesty are:
- Administration component for SG shortfalls will be waived (currently $20 per SG statement lodged)
- the Part 7 penalty for failing to lodge an SG statement, equal to double the amount of the SGC, i.e. 200 per cent of the SGC payable will not apply
- Catch-up SG payments made between 24 May 2018 and 23 May 2019 will be tax deductible (generally, late payments of SG are not deductible for tax purposes)
The measures are aimed to incentivise employers to get up to date with their obligations and assist the Government in tackling the SG gap problem.
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