ATO Interpretative Decision

ATO ID 2008/28 (Withdrawn)

Superannuation

Superannuation guarantee: liability of liquidator for superannuation guarantee charge in respect of a GEERS advance
FOI status: may be released
  • This ATO ID is withdrawn because it contains a view in respect of General Employee Entitlements and Redundancy Scheme (GEERS) that does not apply after 5 December 2012. The Fair Entitlements Guarantee Act 2012 commenced operation on 5 December 2012. The Fair Entitlements Guarantee replaces the General Employee Entitlements and Redundancy Scheme (GEERS).

    Despite its withdrawal, this ATO ID continues to be a precedential ATO view in respect of decisions for income years up to, and including, 5 December 2012.

    See ATO ID 2015/15, which reflects the same view in respect of the replacement or rewritten provision, for decisions for income years after 5 December 2012.

    This document has changed over time. View its history.

Status of this decision: Decision Withdrawn 5 June 2015.
CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Does the Superannuation Guarantee (Administration) Act 1992 (SGAA) impose a liability on a liquidator to pay the superannuation guarantee charge (SGC) out of its own funds if the liquidator fails to make sufficient superannuation contributions by the relevant quarterly cut-off date in respect of a General Employee Entitlements and Redundancy Scheme (GEERS) advance the liquidator paid to a former employee of the company?

Decision

No. The SGAA does not impose a liability on a liquidator to pay the SGC out of its own funds if the liquidator fails to make sufficient superannuation contributions by the relevant quarterly cut-off date in respect of a GEERS advance the liquidator paid to a former employee of the company.

Facts

A company became insolvent and a liquidator was appointed.

The effect of the liquidation was the termination of the employment of an employee of the company.

At the date of liquidation, the company owed amounts to the employee for unpaid wages, unpaid annual leave and unpaid long service leave

The company's employee made a claim with the Department of Employment and Workplace Relations (DEWR) for his entitlements for unpaid wages, unpaid annual and long service leave under the GEERS. The GEERS is a payment scheme designed to assist people who have lost their jobs as a result of their employer becoming bankrupt or entering into liquidation, and who are owed certain employee entitlements.

The employee's claim for GEERS assistance was accepted by DEWR.

DEWR paid the GEERS advance to the liquidator. After withholding PAYG tax from the advance, the liquidator forwarded the GEERS advance to the employee but did not make superannuation contributions in respect of the unpaid wage component of the advance (the employee's notional earnings base), by the relevant quarterly cut-off date.

Reasons for Decision

Section 16 of the SGAA states that the SGC is payable by the employer. This obligation is generally not changed by the liquidation process. Section 52 of the SGAA states that in the winding up of a company, any SGC payable by the company is, for the purposes of the payment, to have a priority equal to that of a debt of a company of the kind referred to in paragraph 556(1)(e) of the Corporations Act 2001 (Corporations Act).

There is no provision in the SGAA imposing a personal liability upon a liquidator or other external administrator for payment of the SGC. Therefore, if the liquidator fails to make sufficient superannuation contributions by the relevant quarterly cut-off date in respect of a GEERS advance the liquidator paid to a former employee of the company, the liability to the SGC remains with the company.

Note: as a result of amendments made by the Corporations Amendment (Insolvency) Act 2007, which received Royal Assent on 20 August 2007, the SGC will no longer be afforded priority in liquidation pursuant to section 52 of the SGAA. It will instead be given priority under section 556 of the Corporations Act. The repeal of section 52 of the SGAA, and the concomitant application of section 556 of the Corporations Act to the SGC, will take effect on the date fixed by Proclamation or the first day after the end of the period of six months after Royal Assent. However, this change will not affect the view that the SGAA does not impose a liability on a liquidator to pay the SGC out of its own funds.

Date of decision:  23 January 2008

Year of income:  Year ended 30 June 2008

Legislative References:
Superannuation Guarantee (Administration) Act 1992
   section 16
   section 52

Corporations Act 2001
   section 556
   paragraph 556(1)(e)

Corporations Amendment (Insolvency) Act 2007
   The Act

Related ATO Interpretative Decisions
ATO ID 2008/25
ATO ID 2008/26
ATO ID 2008/27

Keywords
Employees
Liquidation
Superannuation guarantee charge

Business Line:  Superannuation

Date of publication:  8 February 2008

ISSN: 1445-2782

history
  Date: Version:
  23 January 2008 Original statement
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