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  • Module 7: Reducing the risk of penalties

    This module highlights the importance of engaging early with the ATO if issues arise with your super guarantee. Topics covered include:

    Engage and communicate early with us

    We work with employers by providing tools and calculators to help them understand and meet their super guarantee obligations and 'get it right'.

    We base our compliance approach on the relevant facts and circumstances of each case, supporting employers who engage with us and want to get things right. We take firmer action for those unwilling to meet their super obligations.

    In some cases, an employer may be subject to a super guarantee audit.

    From 1 July 2019, changes to the Taxation Administration Act 1953 make it an offence to engage in victimisation of individuals you know or suspect to have made a disclosure to the Commissioner, including employees who have advised us of non-payment of super. More information on these changes is available at Tax whistleblowers.

    If you're unsure about what action to take for your situation, phone us on 13 10 20.

    How to actively engage with us

    Employers that actively engage with us maintain regular contact as required, provide all information requested and take any corrective action required.

    We are less likely to impose additional penalties for employers who engage with us and have a compliance history that demonstrates they have been generally compliant with their super obligations.

    Having difficulty meeting your obligations?

    Employers who are having difficulty meeting their super obligations are encouraged to make a 'voluntary disclosure'. Where this occurs, the ATO has discretion to consider partial or full remission of the Part 7 penalty to ensure that employers are treated appropriately.

    Remission will be considered based on the circumstances of the case. Particular emphasis will be placed on the degree that the employer has attempted to comply and their compliance history. For example, remission may be provided to employers who lodge a Super guarantee charge statement after the relevant due date, but before audit action was started.

    If you're unsure what action to take for your situation, phone us on 13 10 20.

    We can also provide assistance to complete a Super guarantee charge statement and if you are unable to pay on time, help work out a payment plan.

    Circumstances where penalties are applied

    Employers who don't pay the right amount of super contributions to a super fund by the due date are required to lodge a Super guarantee charge statement and are liable for the super guarantee charge.

    Additional super guarantee charge (known as Part 7 Penalty)

    Additional penalties may be imposed under Part 7 of the Superannuation Guarantee (Administration) Act 1992 on employers who fail to provide:

    • a Super guarantee charge statement for a quarter by the due date, or
    • information relevant to assessing their liability to pay the super guarantee charge for a quarter after being requested to do so.

    This means, we may raise a Part 7 penalty if you lodge your Super guarantee charge statement after the due date. We may also apply a 'Part 7 penalty' if we undertake an audit and find that you haven't fully complied with your super guarantee obligations.

    The maximum Part 7 penalty is 200% of the amount of the super guarantee charge payable.

    Employers unwilling to meet their obligations

    If employers fail to engage with us by not replying promptly to our correspondence or not taking steps to resolve their super guarantee discrepancy, we will take stronger action, including additional penalties.

    We may also issue an estimate of a super guarantee charge liability, a garnishee notice or a director penalty notice.

    We take this approach with employers who:

    • repeatedly fail to pay the correct amount of super guarantee
    • attempt to obstruct our ability to determine a super guarantee charge liability
    • repeatedly fail to keep appointments
    • repeatedly fail to supply information without an acceptable reason
    • deliberately supply information that is irrelevant, inadequate or misleading
    • engage in any culpable behaviour to delay the provision of information.

    Penalties relating to super guarantee

    If you don't meet your super guarantee obligations you may be liable for a range of penalties or charges on top of the super guarantee charge:

    Choice liability penalty

    A choice liability penalty may be applied for not giving eligible employees a choice of super fund – for example, if you:

    • haven't given them a Standard choice form within the required timeframe
    • have paid their super to a complying fund but not the super fund they chose
    • charge them a fee for implementing their choice of fund.

    The choice liability penalty is part of the super guarantee charge.

    Director penalties

    The director of a company who fails to meet a super guarantee charge liability in full by the due date automatically becomes personally liable for a penalty equal to the unpaid amount.

    When a super guarantee charge liability remains outstanding, a director penalty notice may be issued. This enables the start of legal proceedings to recover the penalty. Even without issuing a notice, the penalty can be collected by other means – for example, by withholding a tax refund.

    The penalty will be remitted if your company pays the outstanding amount at any time.

    Other types of penalties

    You may be liable for a range of other penalties. These include:

    • general interest charge
    • administrative penalty for a false or misleading statement
    • failing to keep records
    • failing to pass on a TFN
    • an arrangement designed to avoid your obligations.

    See also:

    Amendments, objections, appeals and reviews

    When we receive your Super guarantee charge statement it is treated as an assessment issued on that date.

    Amendments

    You can ask for an amendment at any time within four years of the date the assessment was made (the date the ATO received your Super guarantee charge statement). You must provide copies of all supporting documents with your amendment request.

    Objections

    You can object to an ATO assessment of your super guarantee charge liability within 60 days of the date the assessment was made.

    To object to an assessment, you must:

    • provide us with the grounds for your objection in writing
    • sign your statement (or have an authorised representative sign it)
    • provide us with copies of the evidence to support your objection.

    You must still pay the super guarantee charge, even if you're objecting or requesting an amendment to your assessment. But, if you're successful, we will refund any overpayment.

    You can't object to the general interest charge, although you can ask us to remit it if the circumstances are exceptional.

    Appeals and review process

    If your objection is not allowed in full, you may apply to the Administrative Appeals Tribunal for a review or appeal to the Federal Court against the decision within another 60 days.

    Summary of Module 7

    Important points to remember to reduce the risk of penalties:

    • Engage with us and communicate early in the process.
    • Be aware of circumstances that give rise to penalties.
    • Be aware of the different types of penalties.
    • Understand your rights to amendments, appeals, objections and review processes.
      Last modified: 13 Jun 2019QC 58510