SG Amnesty Bill Passes: What does this mean for Employers?
Ordinarily, employers can face severe consequences for not complying with their superannuation guarantee (SG) obligations. Not only are employers required to pay existing unpaid super contributions and earnings for these contributions, but a variety of other fees which are imposed at the discretion of the Australian Tax Office (ATO). This can include paying ATO administration fees, general interest charges and a penalty under Part 7 of the Superannuation Guarantee Assessment Act 1992 of a considerable amount.
In late February this all changed when Parliament passed the superannuation guarantee amnesty bill which currently awaits royal assent.
What does the Bill actually do?
This Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019 effectively encourages employers who have previously not adhered to SG requirements to come forward, by relaxing penalties for non-compliance.
Under the new regime, eligible employers have six months from the date the bill receives royal assent to correct their non-compliance by disclosing their omission to the ATO in the approved form. The Bill aims to repay employer’s historically unpaid super contributions so non-compliance in the current period will not be covered by the Bill as a means of avoiding applicable penalties.
For those employers who do come forward, penalties will be reduced to only repaying initial unpaid employer super contributions and notional unpaid earnings on these contributions. This means, employers will essentially be exempt from the application of Part 7 ATO imposed penalties which, ordinarily can be up to 200% of the super contributions payable. What’s more, these super contributions are tax deductible and will remove the administrative component of the original penalty.
So, what do employers have to do to qualify?
To be eligible for the amnesty period, there are various conditions employers must comply with which include the following:
- Employers must voluntarily disclose their non-compliance to the ATO within the 6-month period.
- The non-compliance must have occurred between the period between of 1 July 1992 and 24 May 2018.
- Employers must not have been informed by the ATO that they are examining the employer’s SG compliance for the relevant quarter.
- Employers must not have been previously disqualified.
What happens if employers do not disclose in the period?
Under the new Bill, if an employer does not disclose their non-compliance before the amnesty period ends, they could face harsher, automatic penalties. A minimum penalty of 100 per cent of the SG charge payable will be imposed, effectively limiting the commissioner’s ability to remit penalties. Further, employers who genuinely believed they were not required to disclose will have no scope to argue that the ATO imposed penalties should not apply to them, so it is important you seek independent, tailored legal advice to your situation.