On 24 May 2018, Minister for Revenue and Financial Services announced the commencement of a 12 month Superannuation Guarantee (SG) Amnesty.
This is a one-off opportunity for employers to self-correct any non-compliance with employer SG obligations without penalty.
The Amnesty will be available from 24 May 2018 to 23 May 2019, subject to clearing parliament and sealed into legislation.
For employers who may have had difficulty with meeting SG payments in the past, this is a positive initiative. Employers who voluntarily disclose previously undeclared SG shortfalls (i.e. have not paid their employees super on time) during the Amnesty and before any before the notice of any audit of SG obligations will –
- not be liable for the administration component and penalties that may otherwise apply to late SG payments, and
- be able to claim a deduction for catch-up payments made in the 12-month period.
The Amnesty applies to previously undeclared SG shortfalls for any period from 1 July 1992 up to 31 March 2018, but will not cover any SG obligations on or after 1 April 2018.
To take advantage of this Amnesty, employers will still be required to pay ALL employee entitlements, the nominal interest and any associated general interest charge. Click here to read more on the nominal interest calculation – Nominal Interest Calculation.
Why is this a positive move?
There are two main reasons as to why this amnesty is positive to non-complying employers.
- Any payment of outstanding SG obligations during the amnesty are tax deductible. Without this amnesty in place, SG paid late are not tax deductible to the employer.
- The general rule and penalty for late payment of SG obligations is a shortfall penalty, equal to the amount of SG unpaid. Therefore, double the amount of employee SG that was originally owed. Under the amnesty, the penalties are much more lenient.
Should wayward employers take the opportunity to correct previous errors?
The team at MKS Group firmly believe that employers should consider this a positive move and take the opportunity to clear previous unpaid SG.
It not only will allow employers to meet previous unpaid debts and have a clear conscious.
More importantly, from the 1 July 2018 Single Touch Payroll (STP) comes into effect for employers with 20 or more employees. What is STP? Employers will now report all PAYG Withholding and Superannuation Obligations owed with every payroll processed in their business. This reporting will be processed with every payroll and will instantly highlight to the Australian taxation Office (ATO) which employers are meeting their withholding and super obligations. Read more here about Single Touch Payroll – STP is coming.
Want to know more?
For further information or assistance in reviewing your circumstances, please contact our team of experts today!
MKS Group Pty Ltd
p 03 9374 8400
This article is provided as general information only and does not consider your specific situation, objectives or needs. It does not represent accounting advice upon which any person may act. Implementation and suitability requires a detailed analysis of your specific circumstances.