ATO offers relief for businesses who are failing to pay super

For businesses who have struggled to make super payments for their employees, an amnesty looks to be available. While not yet law, on May 24 2018 the government announced the commencement of a 12-month Superannuation Guarantee Amnesty. And the ATO is already encouraging employees to take advantage.

Effectively, this Amnesty gives you to the chance to make up the shortfall on your super payments up until 23 May 2019.

How does the SG Amnesty work?

Many businesses are in a situation whereby they have not completely paid their super obligations, and thus face a shortfall and the concomitant consequences. This Amnesty potentially gives you breathing room:

  • You voluntarily come forward between 24 May 2018 and 23 May 2019 and declare your super shortfall to the ATO
  • You can disclose shortfall amounts for any period from 1 July 1992 up to 31 March 2018, which have not been previously disclosed. You cannot declare for amounts beyond 1 April 2018.
  • Once you disclose, you will not be liable for the administration component and penalties that usually apply for late SG payments
  • You’ll be able to claim a deduction for any catch-up payments you make in the 12-month amnesty period.

You still need to pay all employee entitlements, including unpaid SG amounts owed to employees, the nominal interest, and any associated general interest charge (GIC).

Am I eligible?

This one-off opportunity to correct your super non-compliance while avoiding penalties aims to be open to most businesses:

  • You must voluntarily disclose amounts of SG shortfall within the 12-month Amnesty period
  • You can only disclose amounts of SG shortfall that have not previously been disclosed
  • You are not eligible to disclose for any periods during which you were subject to an audit of SG.
  • You can amend a previously disclosed shortfall for periods that have already been assessed, but only newly-disclosed amounts are eligible.

Even though the legislation has not passed, it is important to note that if you do not take advantage of the Amnesty under the above broad scope, you may face higher penalties in the future. Even more significantly, this Amnesty is a lucid reminder to consider options to manage your super payments in a compliant manner since, as announced in the recent Budget, Director Penalty Notices (DPNs) apply to superannuation liabilities.

What happens if the Amnesty does not pass into legislation?

As mentioned, you can disclose under the Amnesty now, and the ATO encourages you to do so. If you do make payments now and the legislation is not passed, you’ll be asked to still pay the administration component, the deductions under the amnesty will be ruled out, but the ATO will remit the penalties. If the law is passed, then any catch-up payments you make to reduce your SG shortfall become tax-deductible, late payment penalties will be waived, and you won’t need to pay the administration component.

How do I access the Amnesty?

You can complete a payment form for the full SG shortfall amount and make the payment through the ATO’s business portal. If you wish to rather pay in stages, then you can lodge a payment form and the ATO will arrange a payment plan.

The benefit of accessing the Amnesty is relative to the periods of super wherein you have a shortfall. But, if you are facing any shortfall amount, it is best you take advantage of the payment options sooner rather than later so as to arrange a payment plan and to ensure you declare your shortfall for periods where you are not facing an SG audit. The Amnesty extends only for a 12-month period, and time can slip by easily.

Calibre is well prepared to advise you in this process. While the Amnesty has not yet passed into law and as such is not guaranteed, it is prudent to consider you superannuation liabilities. Contact our business advisors and tax accountants who have had extensive experience in negotiating with the ATO in regards to outstanding super.

Important Disclaimer: Readers should not act solely on the basis of the material on this page. Items herein are general comments only and do not constitute or convey advice. Legislation and proposals of legislation are also subject to constant change. We therefore recommend that formal advice be sought before acting in any of the areas. This news article is issued as a guide to the readers. Calibre Business Advisory Pty Ltd and its associated entities disclaims any losses that may be incurred as a result of the reader undertaking any action based on this article.