Superannuation Amnesty Window is closing

Daniel Pegdon

16 July 2020

The Superannuation Amnesty which provides employers with an opportunity to “come clean” and declare unpaid or late superannuation guarantee (SG) payments to the Australian Taxation Office (ATO) is scheduled to end on 7 September 2020. If your business does have unpaid SG obligations that fell within the amnesty period (quarters beginning from 1 March 1992 to 1 January 2018), time is running out and you need to ensure you have considered utilising the amnesty as the ATO can issue significant penalties if any historical non-compliance is discovered at a later date. The benefits of addressing unpaid SG during the amnesty window are reduced penalties and administration charges and the ability to claim a tax deduction for late SG payments where the payments are made prior to 7 September 2020.

Superannuation Guarantee Shortfall Penalties
Ordinarily where SG obligations are paid late, the ATO can issue employers with Part 7 penalties which can be as high as 200% of the SG shortfall amount. During the amnesty period, these penalties are reduced to nil. After the amnesty ends, the ATO has no discretion to remit penalties under 100% in relation to quarters covered by the amnesty. Practically this means employers could have to pay the SG amount twice if non-compliance is discovered at a later date (i.e. the original SG amount plus a penalty equal to the late amount). To illustrate the impact of not meeting your SG obligations for employees, we have provided two common examples.

Example - underpaid amounts
ABC Pty Ltd had underpaid (not paid at all) its SG obligations by $30,000 in relation to the 1 April 2017 – 30 June 2017 quarter which the ATO discover during an audit of the company’s 2017 Income Tax Return after 7 September 2020. The ATO then issues them a penalty of 200% of the unpaid amount which equates to $60,000. Although ABC Pty Ltd may have made an honest error which led to the underpayment, the ATO can only reduce the penalty to $30,000 as the legislation now prevents them from remitting the amount any further unless there are “exceptional circumstances”. Had ABC corrected this during the amnesty by lodging SGC forms and paying the $30,000 before 7 September 2020, that payment would become deductible and no Part 7 penalty and administration fees would apply.

Example - undeclared amounts
EFG Pty Ltd had paid its SG liability late in relation to the 1 April 2015 – 30 June 2015 quarter. The due date of making the payment was 28th July 2015 but the company paid the SG liability totaling $50,000 directly to their employees’ superannuation funds on 30th August 2015 – SG was paid, except it was late. The Company had not prepared and submitted the SG charge statements to the ATO which they are required to do under law as a result of the late payment. The ATO discover this during a tax audit and issue them a penalty of 200% of the late amount which equates to $100,000. Although EFG Pty Ltd may have made an honest error, the ATO can only reduce the penalty to $50,000 as the legislation now prevents them from remitting the amount any further unless there are “exceptional circumstances”. Had EFG corrected this during the amnesty by lodging SGC forms before 7 September 2020, no Part 7 penalty and administration fees would apply.

Clearly the impacts of not paying SG obligations are significant, and considering the ability to utilise the amnesty if possible is important.

We had covered the amnesty in more detail in one of our earlier newsletters which you can access by clicking here.

If you would like to make use of the amnesty or would like further information in relation to this, please contact your Moore Australia advisor as soon as possible.

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