If you’re anything like us, you’ve been eagerly watching for updates on the 12-month SG Amnesty ever since it first announced by the Government in May 2018.
Since then it’s been a bit of a job to get it across the line, with the bill lapsing when Parliament was prorogued for the 2019 Federal Election and then being re-surfaced (with amendments) in September 2019 after almost a year of uncertainty for employers and people like us, your advisors.
Earlier this week, the long-awaited bill finally passed both houses of parliament and is now awaiting royal assent. Employers will then get six months to disclose historical non-compliance before tougher penalties apply.
The SG Amnesty is a one-off opportunity for you, as an employer, to catch up on underpaid employee superannuation with reduced penalties and also some tax savings for your business. It comes hand-in-hand with other reforms rolled out recently to tackle superannuation compliance such as stronger penalties, including jail time being imposed on directors.
It gives you a significant incentive to review and get up to date on your historical superannuation contributions and voluntarily disclose any shortfalls between 1 July 1992 to 31 March 2018 (the Amnesty quarters). The benefits of the Amnesty will not be available for SG non-compliance on or after 1 April 2018.
If you know you have unpaid super obligations within the relevant quarters, it’s better to be safe than sorry. There are great incentives to voluntarily disclosing, and very tough penalties if you don’t.
Advantages include:
To be eligible for the Amnesty, an employer must:
While the start date of the Amnesty is still 24 May 2018 as originally announced, the Amnesty is proposed to end six months after the day the Bill receives Royal Assent (Previously it was to run for only 12 months and end on 23 May 2019).
If you do not take advantage of this Amnesty, you could be caught out and hit with a minimum 100% penalty on top of the superannuation guarantee owed, and up to 200% for serious cases. Throughout this period, the Australian Taxation Office (ATO) will continue it’s audit and enforcement activity for employers who do not own up voluntarily.
Senator The Hon Jane Hume says, “Since the one-off Amnesty was announced, over 7,000 employers have come forward to voluntarily disclose historical unpaid super .. The ATO estimates an additional 7,000 employers will come forward due to the extension of the Amnesty. This means around $160 million of superannuation will be paid to employees who would otherwise have missed out.'
There are a number of areas where the obligation to pay compulsory superannuation is not clear-cut.
The most common mistakes, where well-meaning businesses have inadvertently underpaid compulsory superannuation, are gone into detail in this blog by Cooper Grace Ward. But some examples are;
Some employers have difficulty in understanding what hours of work are ‘ordinary’. Ensure you are well-versed in your employee contracts and awards that are applicable, as annual leave loading can attract SCG payments as it’s considered ordinary time (ATO).
Overtime is not generally ‘ordinary’, but complications can arise around:
Whether an individual is an employee or independent contractor continues to be the subject of many disputes, so best to get clear on that by using this ATO tool.
The legislation deems certain contractors to be employees. This applies to genuine independent contractors. The list of deemed employees includes:
We will keep an eye on developments in this space and keep you up to date. But is it is expected that the ATO will communicate to employers that have already paid the full SGC how they plan to refund the administration component and penalty to those who are eligible for the Amnesty. Depending on the timing, employers may also need to amend their tax returns to claim a tax deduction for the payment.
With just 6 months to action from date of royal assent, and the suite of reforms to protect SG entitlements, now is THE time to bring your compliance up-to-date, so you can get on with what’s more important; looking to the future and growing your business.
Contact us today so we can help you take advantage of this one-off legislation!
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