The Bill amends the Income Tax Assessment Act 1997 and the Superannuation Guarantee Administration Act 1992 and provides for a one-off amnesty (SG Amnesty) to encourage employers to rectify historical non-compliance with their superannuation guarantee (SG) obligations.
Where an employer pays an outstanding SG charge or superannuation contribution (or rectifies an underpayment) during the Amnesty Period (see below) and certain conditions are met:
- the employer can claim a tax deduction to offset the SG charge; and
- the employer will not be subject to any penalties or administrative fees which are usually applied to late and non-compliant payments.
However, the employer will still be liable to pay interest on late payments of SG charge.
The SG Amnesty will be available for a six month window ending 7 September 2020. Employers will need to self-report to the Australian Tax Office to avail themselves of the SG Amnesty.
What period will the SG Amnesty cover?
The beneficial treatment provided by the SG Amnesty covers the period starting on 1 July 1992 and all subsequent quarters up to, and including, the quarter starting on 1 January 2018 (ending 31 March 2018) (the Amnesty Period). Further, payments of the SG charge for the period 24 May 2018 to 7 September 2020 will be tax deductible.
What conditions do I need to satisfy?
To be eligible for the SG Amnesty you must:
- have not been informed the Commissioner of Taxation is examining or intends to examine your SG obligations for the quarter(s) your disclosure relates to;
- disclose a SG shortfall for a quarter starting from 1 July 1992 to 31 March 2018 which has not been previously disclosed
- lodge your voluntary disclosure to the ATO, using the SG Amnesty form by 7 September 2020;
- pay the amount owing to the ATO or set up a payment plan after you lodge the SG Amnesty form.
What if I already made a disclosure between 24 May 2018 and 6 March 2020?
The ATO will be reviewing all disclosures made during this period and if the disclosure is eligible, will apply the SG Amnesty and will advise you of your eligibility. There is no need to make an additional disclosure or lodge the SG Amnesty form/
What are the consequences of not disclosing during the SG Amnesty period?
Once the SG Amnesty period ends, the Commissioner will be restricted from exercising a discretion to reduce penalties for SG non-compliance in certain situations for all quarters covered by the SG Amnesty. This will mean that employers who fail to self-disclose during the SG Amnesty period are likely to be subject to larger penalties and can expect stronger enforcement action by the ATO.
What should I do?
Employers should take this opportunity to:
- check that they have correctly calculated SG contributions on all ordinary time earnings paid to employees (and not just base salary);
- consider whether workers who have been classified as contractors should be treated as deemed employees who are entitled to receive SG contributions; and
- follow up with the ATO if a disclosure that should be eligible for the SG Amnesty has already been made and you do not hear anything from the ATO.
Our team is able to review employers' historical SG contribution records and assist in ensuring compliance and in directing employers to areas that may need to be rectified.
For any assistance, or to discuss the SG Amnesty, please contact our team.