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  • Proposed Superannuation Guarantee Amnesty

    The deductibility and removal of the administration component proposed in the Amnesty depend on the passage of legislation. Until this occurs, the current law applies.

    On 24 May 2018, Minister for Revenue and Financial Services announcedExternal Link the commencement of a 12 month Superannuation Guarantee Amnesty (the Amnesty).

    The Amnesty is a one-off opportunity for employers to self-correct past super guarantee (SG) non-compliance without penalty.

    Subject to the passage of legislation, the Amnesty will be available from 24 May 2018 to 23 May 2019.

    Employers who voluntarily disclose previously undeclared SG shortfalls during the Amnesty and before the commencement of an audit of their SG will:

    • not be liable for the administration component and penalties that may otherwise apply to late SG payments, and
    • be able to claim a deduction for catch-up payments made in the 12-month period.

    Employers will still be required to pay all employee entitlements. This includes the unpaid SG amounts owed to employees and the nominal interest, as well as any associated general interest charge (GIC).

    The Amnesty applies to previously undeclared SG shortfalls for any period from 1 July 1992 up to 31 March 2018.

    The Amnesty does not apply to the period starting on 1 April 2018 or subsequent periods.

    Employers who are not up-to-date with their SG payment obligations to their employees and who don't come forward during the Amnesty may face higher penalties in the future.

    Accessing the Amnesty is a simple process. If you are able to pay the full SG shortfall amount directly to your employees' super fund or (funds), then complete a payment form and submit it to us electronically through the business portal.

    If you are unable to pay the full SG shortfall amount directly to your employees' super fund or (funds), then complete and lodge a payment form and we will contact you to arrange a payment plan. If you chose to, you can start payment before we contact you. This will reduce the GIC you would otherwise have to pay.

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    Passage of legislation

    Legislation to give effect to the Amnesty was introduced into Parliament on 24 May 2018 and is intended to apply retrospectively once enacted.

    Until the legislation is enacted, we are required to apply the existing law. The administration component of the SG charge remains legally payable and deductions cannot be claimed. The ATO will not require payment of the administration component until the outcome of the legislation is known.

    If the proposed law does not come into effect:

    • any contributions and payments made under the Amnesty will not be tax-deductible
    • any self-assessments that anticipated the new law will need to be amended to include the administration component, and you will be required to pay the administration component. Part 7 penalties will be imposed and may be remitted in accordance with our existing remission policies.

    You will not be able to receive a refund for payments you have made under the Amnesty if the law does not pass, as these amounts were always payable under the existing law.

    Eligibility for the Amnesty

    To be eligible for the Amnesty you must:

    • voluntarily disclose amounts of SG shortfall within the 12-month Amnesty period – between 24 May 2018 and 23 May 2019,
    • disclose amounts of SG shortfall that have not previously been disclosed, and
    • not be subject to an audit of your SG for the relevant periods.

    If you have already been assessed for a period, you can amend a previously disclosed SG shortfall, but only newly-disclosed amounts are eligible.

    What if you are subject to an audit of your SG?

    You are not eligible for the Amnesty for any periods that are subject to an audit of your SG. An audit of your SG can be initiated at any time by the ATO. The ATO will also take action in response to employees who advise they haven’t received their SG, which may also result in an audit.

    Benefits of the Amnesty

    Benefits of the Amnesty include:

    • the administration component of the super guarantee charge (SGC) is not payable
    • Part 7 penalty will not be applied
    • all catch-up payments made during the 12-month Amnesty period will be tax-deductible.

    Administration component

    The administration component of $20 per employee per period is not payable in respect of SG shortfalls for new employees who have only been included because of a disclosure under the Amnesty.

    Deductibility

    For catch-up payments to be tax-deductible, they must be made to a super fund or the ATO during the Amnesty period.

    If you have a payment plan with the ATO that extends past 23 May 2019, only those payments made between 24 May 2018 and 23 May 2019 will be deductible.

    How to access the Amnesty

    To take advantage of the Amnesty you need to calculate the amount payable (the SG shortfall plus nominal interest) and lodge one of these forms:

    The payment option you choose will determine which form you need to complete.

    If you choose to access the Amnesty, either:

    If you've already lodged an SGC statement or received an SGC assessment for a quarter, you can only use the SG Amnesty ATO payment form.

    Completed forms need to be lodged electronically through the Business Portal or on your behalf by your tax or BAS agent.

    Your accountant or tax agent can provide further advice on participating in the Amnesty, based upon your particular circumstances.

    Confirmation

    Once you lodge your SG Amnesty form through the portal, we will send you an email acknowledgement.

    If we determine you are not eligible to access the Amnesty because we have already advised you that the period is under audit:

    • we will inform you and amend your assessment to include the administration component of – $20 per employee per period in your SGC liability
    • the Part 7 penalty will be imposed and may be remitted in accordance with our usual practices
    • payments of SGC and contributions used to offset SGC will not be tax deductible.

    Payment options

    Where you can pay the full SG shortfall amount for a period you should pay directly to your employees' super fund (or funds).

    Where you are not able to pay the full SG shortfall amount for a period you should pay to the ATO. 

    Pay direct to the super funds

    If you are able to pay the full SG shortfall amount for each period (including nominal interest) to an employee super fund (or funds), and have not previously been assessed for SGC, you need to:

    • pay the relevant amounts directly to the relevant employee super fund (or funds), and
    • inform us by completing and lodging the SG Amnesty Fund payment form (which includes an election to have those contributions offset against the SGC liability).

    You should lodge this form with us on the same day you pay the relevant super fund.

    Paying directly to the employee super fund (or funds) is the simplest way to pay your outstanding SG shortfall amount and you will not have to pay any GIC.

    Paying directly to super funds is not available for periods where you have previously been assessed for SGC – in these cases, any outstanding SGC amounts must be paid to the ATO.

    Pay the ATO

    If you cannot pay the full SG shortfall amount for each period to a super fund (or funds), you need to:

    If you have difficulties paying the full amount, you can set up a payment plan with us to pay the amount owing over an agreed period.

    We will advise you of the amount payable and a payment reference number via the Business portal. Our debt area will contact you to set up a payment plan.

    If you need to revise your ATO payment plan, or set up a new one, you should do this as soon as possible to avoid losing the benefits of the Amnesty.

    Failure to pay

    Payment is essential for you to remain eligible for the Amnesty.

    The Commissioner may notify you that you no longer qualify for the Amnesty if you do not pay the SGC amount payable, and either:

    • do not enter into a payment plan that includes the payment of the SGC amount, or
    • fail to comply with the terms of a payment plan you have entered into that includes the payment of the SGC amounts.

    Should this happen you will be notified which periods you no longer qualify for. Generally, these will be the periods which have outstanding SGC amounts owing at the time.

    You may need to renegotiate a payment plan; for example, if you are already on a payment plan and make a disclosure in the Amnesty which increases your existing debt with us, resulting in a new payment arrangement. We will not consider this to be a failure to comply.

    Where you no longer qualify for a period, we will amend your SGC assessment for that period to include the administrative component, and we may apply Part 7 penalties. In addition, any future payments will not be tax-deductible.

    Defaulting on a payment plan may lead to other debt recovery action.

    Penalties

    If you are not up-to-date with your SG payment obligations to your employees and don't self-correct your SG shortfalls during the Amnesty you may face higher penalties in the future.

    The Part 7 penalty is automatically imposed at 200% of the SGC amount which may be partially remitted. In determining any remission of the penalty, we will take into account the employer’s ability to access the Amnesty.

    While the Commissioner must consider the particular circumstances of each case, in general a minimum penalty of 50% of the SGC will be applied to employers who could have come forward during the Amnesty but did not.

    Impact on employees

    When you pay outstanding SG contributions, your employees will receive the SG shortfall amount plus the nominal interest from the start of the relevant period to the date the SGC is payable. Employees will also receive GIC that accrues on the SG shortfall amount.

    Make sure you inform your employees of any SG payments you make to them through the Amnesty.

    Where an employee exceeds the contributions cap because of these contributions, the Commissioner can exercise discretion to disregard the contributions made under the Amnesty.

    • Where an employer pays the SGC to the ATO, the employee will not need to apply for the Commissioner's discretion.
    • Where an employer pays the SGC directly to an employees' super fund, the employee will need to inform us of the payment by applying for the Commissioner's discretion.

    Contributions made under the Amnesty will not count towards your employees' income or contributions for Division 293 purposes.

    See also:

    Last modified: 08 Jun 2018QC 55626