Superannuation guarantee amnesty

May 29, 2020

On 6 March 2020 the government introduced a superannuation guarantee (SG) amnesty (the amnesty). The amnesty allows employers to disclose and pay previously unpaid super guarantee charge (SGC), including nominal interest, that they owe their employees, for quarter(s) starting from 1 July 1992 to 31 March 2018. Eligible disclosures will not incur the administration component ($20 per employee per quarter) or Part 7 penalty.

In addition, payments of SGC made to the ATO after 24 May 2018 and before 11:59 PM 7 September 2020 will be tax deductible.

Employers who have already disclosed unpaid SGC to the ATO between 24 May 2018 and 6 March 2020 don’t need to apply or lodge again – see Disclosures of unpaid SG between 24 May 2018 and 6 March 2020.

Employers who come forward from 6 March 2020 need to apply for the amnesty by 7 September 2020.

The ATO will continue to conduct reviews and audits to identify employers not paying their employees SG. If they identify these employers before they come forward, they will not be eligible for the benefits of the amnesty. They will also be required to pay:

  • SG shortfall
  • nominal interest (10%)
  • administration component ($20 per employee per quarter)
  • Part 7 penalty (up to 200% of the SGC).

In addition, payments of the SGC won't be tax deductible.

Paying super is an important part of being an employer. If you're not eligible for the amnesty, or you have unpaid super for quarters that are not eligible, you must still lodge an SGC statement.

Why you should act now

The ATO's ability to identify underpaid SG has increased through greater data visibility as a result of more frequent reporting requirements by super funds and employers.

They are increasingly using this capability to identify employers that have underpaid SG.

If the ATO identifies underpaid SG amounts for a quarter that was covered by the amnesty that you have not disclosed, in addition to the SG shortfall you will also be liable for:

  • the administration component ($20 per employee per quarter)
  • up to a 200% Part 7 penalty (at minimum 100% if remission is applicable)
  • nominal interest (10%)
  • the general interest charge (GIC).

In addition, you will not be able to claim a tax deduction for the SGC paid.

Eligibility for the amnesty

To be eligible for the amnesty you must meet and fulfil all the following criteria. You must:

  • have not been informed the ATO is examining or intends to examine your SG obligation for the quarter(s) your disclosure relates to
  • disclose an SG shortfall for an employee that you haven’t already disclosed to us (or disclose additional amounts of SG shortfall for a quarter previously disclosed)
  • disclose for quarter(s) starting from 1 July 1992 to 31 March 2018.
  • lodge your completed SG amnesty form with the ATO so we receive it no later than 7 September 2020.

Note: You will also need to pay the amount owing to the ATO or set up a payment plan after you lodge the SG amnesty form. You need to do this to avoid being disqualified and losing the benefits of the amnesty.

Benefits of the amnesty

If you qualify for the amnesty, you:

  • will be able to claim a tax deduction for the SGC amounts you pay to the ATO by 7 September 2020
  • won’t be required to pay the administration component ($20 per employee per quarter) of the super guarantee charge (SGC)
  • won’t have a Part 7 penalty applied.

Note: If you have already been assessed for a quarter, you can amend a previously disclosed SG shortfall. However, only newly-disclosed, additional amounts will be considered for the benefits of the amnesty.

Your professional advisor can provide further advice on participating in the amnesty, based upon your particular circumstances.

Disclosures of unpaid SG between 24 May 2018 and 6 March 2020

If you previously disclosed unpaid SG to the ATO in anticipation of the SG amnesty, you don't need to lodge again or apply on the SG amnesty form.

The ATO will review all disclosures received between 24 May 2018 and 6 March 2020.

If your disclosure is eligible we will apply the amnesty law and advise you of your eligibility.

For eligible disclosures the ATO will issue notices of amended assessment to reflect that the benefits of the amnesty have been applied retrospectively and the administration component has been removed. A notice will issue for every quarter where they have removed the administration component.

These notices do not reflect payments made. The ATO will also issue a Statement of Account which will reflect the correct account balance.

If you haven’t paid or set up a payment plan, you should take action now to avoid being disqualified and losing the benefits of the amnesty.

You should make sure that your financial institution account details are updated and correct via the Business Portal, or by phoning the ATO on 13 28 66. If you are eligible for a refund of any amounts previously applied to your account, this will allow the ATO to issue your refund in a timely manner.

How to apply for the amnesty

To apply for the amnesty, you must:

  • download the approved SG amnesty form (XLS 613KB)This link will download a file
  • complete one form per quarter using the instructions contained in the form
  • check the amounts are correct and there are no errors on your form
  • complete the declaration to confirm you are applying for the amnesty
  • save the form as an .xls file type.

You must keep records for five years after your disclosure that identifies the employees and amounts of SGC you have disclosed.

The ATO recognises that your disclosure may relate to a year in excess of these general record keeping requirements for businesses. In such cases, your disclosure can be based on a range of information sources.

Note: SGC statements lodged after 5 March 2020 won’t be considered for the amnesty. If you don't use the approved SG amnesty form or you don't save it as an .xls file type, your application may not be accepted.

Next steps:

Lodge your SG amnesty form by secure mail

Do not use the SGC calculator in the Business Portal if you want to apply for the amnesty.

To ensure the correct calculation of the amount of SGC you owe and efficient processing of your amnesty application you need to:

Please contact Mr Taxman for further advice on participating in the amnesty, based upon your particular circumstances.

Receive confirmation of your eligibility

If you are eligible for the amnesty, you:

  • will be informed in writing within 14 business days of the ATO receiving your application
  • won’t be charged the administration component ($20 per employee per quarter)
  • won’t be charged part 7 penalty
  • will need to pay or set up a payment plan to pay the total amount of SGC you owe. The ATO will send you your payment reference number (PRN).

You will be eligible to claim a tax deduction for any payments you make between 24 May 2018 and 7 September 2020 toward the amount of SGC eligible for the amnesty.

Payments of SGC made after 7 September 2020 won’t be eligible as a tax deduction.

Pay in full or set up a payment plan

You must pay the amount of SGC owing to avoid losing the benefits of the amnesty.

If you have paid directly to a super fund and have not lodged the amnesty form, you must claim a late payment offset.

If you lodge your amnesty forms to the ATO, you must pay them. Don’t pay the amount of SGC owing direct to your employees’ funds or to a clearing house.

It’s important you act quickly to either:

  • pay the amount owing in full
  • set up a payment plan for the amount of SGC you owe.

You will need to know your PRN. You can find your PRN on any SGC related notice or SGC payment slip you have previously received from the ATO for the same ABN.

If you don’t know your PRN you can get it from the ATO by phoning 1800 815 886 between 8.00am to 6.00pm, Monday to Friday. Tell them that you need to request a PRN for your SG employer role. Make sure you have your ABN and contact details handy.

Once you have your PRN refer to How to pay for details on how to make payment.

Note: Only amounts paid toward the SGC identified as eligible for the amnesty and paid before 7 September 2020 will be eligible as a tax deduction.

Avoid losing the benefits of the amnesty

The law has introduced conditions that apply to the ongoing eligibility of the amnesty.

After the ATO advises you are eligible for the amnesty, you will be disqualified and will lose the benefits of the amnesty if you don’t:

  • pay the SGC amount payable, or
  • enter into a payment plan to pay the amount of SGC payable to the ATO, and
  • comply with the terms of your payment plan for the SGC amount owing.

If your disclosure is disqualified from the amnesty, the ATO will:

  • notify you in writing of the quarter or quarters you have been disqualified for
  • charge you the administration component ($20 per employee per quarter) of the SGC
  • apply PS LA 2019/1 to determine whether you should receive a Part 7 penalty
  • issue you a notice of amended assessment with the increased amount owing
  • continue to work with you through our debt processes to collect the amount outstanding.

In addition, any payments you make for that quarter will not be tax deductible. This is even if you make them before 7 September 2020.

If you are disqualified from the amnesty after having already lodged your tax return and claimed a tax deduction, you will need to amend your tax return.

Applications not eligible for the amnesty

If the ATO determines your application is not eligible for the amnesty you:

  • will be notified in writing about why your disclosure was not eligible
  • will be charged the administration component ($20 per employee per quarter) of the super guarantee charge (SGC)
  • may be charged a Part 7 penalty. A minimum 100% penalty will apply after the amnesty ends if an assessment is made without disclosure or the disclosure is made after notification of an investigation by the ATO. Remission of Part 7 penalties will be determined under PS LA 2019/1.

In addition, any payments of SGC and contributions used to offset SGC will not be tax deductible.

Employee entitlements

When you pay outstanding SG contributions, your employees will receive the following amounts:

  • SG shortfall
  • nominal interest from the start of the relevant quarter to the date the ATO receives your disclosure
  • general interest charge that accrues on the SG shortfall amount until the amount of SGC is fully paid.

Where an employee exceeds the contributions cap because of these contributions, the Commissioner of Taxation will exercise discretion to disregard the contributions made under the amnesty.

Contributions made under the amnesty will not count towards your employees' income or contributions for Division 293 purposes.

Super guarantee amnesty key dates

 

Description

Dates

Quarters that qualify

1 July 1992 to 31 March 2018

Quarters that don’t qualify

Quarter commencing 1 April 2018 onward

Amnesty period

24 May 2018 to 06/09/2020

No need to apply or lodge again if already notified the ATO of unpaid super

24 May 2018 to 06/03/2020

Need to apply for the amnesty on the SG amnesty form to be considered for amnesty

Date of royal assent 06/03/2020 to 07/09/2020

Payments of SGC eligible for the tax deduction

24 May 2018 to 07/09/2020 

Payments of SGC not eligible for tax deduction

Before 24 May 2018 and after the end of the amnesty period  07/09/2020

Minimum Part 7 penalty of 100% generally have a minimum penalty of 100% applied  

From the day after the end of the amnesty period 07/09/2020

 

 

 

 

 

 

 

 

 

Tags: BookkeepingBusinessCompany taxDeductionsEmployeesEmployersPAYG WithholdingSmall BusinessSMSFSuper

Author: Mr Taxman, Dr Adrian Raftery

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    Post: Claiming car expenses

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    Post: Claiming car expenses

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    Post: Claiming car expenses

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    Post: Claiming car expenses

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    Post: Claiming car expenses