In summary

The SG amnesty Bill allows employers to take advantage of a one off amnesty to self-correct historical superannuation guarantee non-compliance dating back to the introduction of the SG regime in July 1992.

As the Bill awaits Royal Assent, employers still have time to review their SG compliance history and consider whether a voluntary disclosure is required.

In detail

SG amnesty Bill

The SG amnesty Bill announced on 18 May 2018 has finally been passed by Parliament and will soon become law. Then there will be 6 months during which employers can still voluntarily disclosure and pay unpaid SG for historical quarters that ended before the announcement date with reduced penalties. If reviewing historical SG compliance, particular risk areas to watch include whether:

  • all pay codes are correctly coded as subject to SG or not;
  • individual contractors are correctly classified as covered by SG or not; and
  • third party payments of remuneration to employees have been identified and subjected to SG where required.

Under the tax record keeping requirements, employers generally need to keep at least 5 years of payroll records to explain SG calculations.

To encourage participation in the amnesty using a big stick, an additional 100% minimum culpability penalty will generally apply for SG owed for quarters that ended before the announcement date if that SG either:

  • remains undisclosed at the end of the amnesty but is later detected; or
  • is disclosed during the amnesty but not paid by the end of the amnesty, and not paid in accordance with an agreed plan with the ATO for later payment.

Automatic Penalties

This penalty will be on top of the usual automatic penalty aspects that apply for late paid SG. These automatic penalties are:

  • that the SG shortfall is calculated as a percentage of the whole of salary and wages (whereas on-time contributions are payable only on earnings for ordinary hours of work);
  • 10% interest is payable from the start of the quarter in which the SG shortfall arose through to when the SG Statement is lodged;
  • a $20 administration fee is payable to the ATO for each affected employee for each quarter; and
  • no part of the late paid SG or penalties are tax deductible.

As a carrot to employers who participate in the amnesty:

  • the $20 administration fee will be waived; and
  • tax deductions will still be allowed for payments made during the amnesty period.

Also, the 15% higher income earner superannuation contributions surcharge tax (known also as Division 293 tax) will not be payable by employees for whom SG is paid under the amnesty.