The clock is still ticking on the superannuation amnesty. Here’s what you need to know.
After a marathon two years, the Federal Government has enacted the Treasury Laws Amendment (Recovering Unpaid Superannuation) Act 2020 (Cth) , giving businesses six months to self-report Super Guarantee shortfalls spanning July 1, 1992 – March 31, 2018.
The legislation offers an amnesty for businesses who confess to underpaying employee superannuation. Although the Australian Tax Office (ATO) will offer flexibility on payment terms, the Covid-19 virus will not lead to an extension of the deadline.
With the recent spotlight on underpayments, it is a timely reminder for companies to run a fine-toothed comb through their employee classifications and contributions ahead of a government crackdown.
The roll out of Single Touch Payroll now means the ATO has a simple tool to keep a near real-time watch on when employer contributions are paid. This means there is nowhere to hide for those not in compliance. The current amnesty is the last chance for employers to get their payments in order not only without penalty, but with tax incentives.
Assistant Minister for Superannuation Jane Hume said employers were not being let off the hook, as the amnesty still required all money owed to be paid, with interest calculated at 10% a year. The amnesty waived penalties and provided tax incentives with the aim of getting missed super to workers faster.
”We encourage employers to check they don’t owe outstanding super – and if they do, to take advantage of this once-only opportunity to set things right before much tougher penalties apply,” Minister Hume said.
Minister Hume went on to warn that non-compliant employers who did not use the amnesty to declare underpayments could face future penalties of up to 200% of money owed. In addition, the Treasury Laws Amendment (2018 Measures No. 4) Act 2019 – includes jail terms of up to a year for employers who continue to do the wrong thing in future.
Australian Small Business and Family Enterprise Ombudsman Kate Carnell urged employers to take advantage of the opportunity but to be mindful of dates saying
“Most small businesses do the right thing in this area, with 95% already complying. However, it is vital that small businesses understand that although they will have a short window of time to declare any errors to the Australian Taxation Office, the amnesty only applies to missed superannuation payments up to 31 March 2018.”
“The ATO has access to company data through Single Touch Payroll, so it’s easy for them to find out if a small business has late or unpaid superannuation.”
So far more than 7000 businesses have self-reported $160 million in unpaid super contributions, with the government expecting another 7000 to come forward before September.
What you need to know
- Treasury Laws Amendment (Recovering Unpaid Superannuation) Act 2020 (Cth) was enacted in March, with the amnesty to run through to September 2020.
- The amnesty covers shortfalls on Super Guarantee payments on payroll periods from 1 July 1992 to 31 March 2018.
- Employers who disclose underpayments between the original amnesty start date 24 May 2018 and September 2020 will be eligible for concessional treatment which includes:
– Waiving of an administration fee calculated at $20 per employee per quarter;
– Ability to claim a tax deduction for shortfalls, once paid;
– Waiving of penalties of up to 200% of payments owed.
- Once the amnesty period ends, the minimum penalty for historical underpayments will be at least 100% of money owned, so companies will effectively pay double the amount owed.
What you need to do
- Review payroll codes to ensure all payments are correctly categorised and in line with relevant awards to avoid any future issues.
- Review historical Super Guarantee payments and declare any shortfalls before September.
- If your business has self-reported a shortfall after the amnesty was announced in 2018 but before it was enacted this year, you can now apply to the ATO for a refund of any administration fees and claim a tax deduction for payments made to correct the underpayment.