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The Return of the Superannuation Guarantee (SG) Amnesty

As we’ve outlined in a previous article, the government’s Superannuation Guarantee (SG) Amnesty was initially introduced in 2018.  The SG amnesty has now been resurrected, and employers are once again being afforded the opportunity to rectify SG issues. So – what should you do if you think you have outstanding contributions owing?

The SG Amnesty

If you haven’t paid the correct amount of Superannuation on behalf of your employees, the amnesty is your chance to fix this. This amnesty will run from 6 March 2020 until 6 September 2020 – as 6 September is a Sunday you’ll be able to make payment up until 11.59pm on Monday 7 September.

It covers SG shortfalls for any quarter between 1 July 1992 and 31 March 2018.  Importantly, to take advantage of the SG amnesty the disclosure must be voluntary and not prompted by an ATO enquiry or audit.

Firstly, the Bad News!

The ATO has outlined that employers found with SG shortfalls who do not disclose it themselves will not be eligible for the amnesty, and will be required to pay:

• The SG shortfall (+ interest)
• Late payment expands your SG obligations to include super on ‘salary and wage’ amounts such as overtime, leave loading and termination payments, that are normally excluded.
• Nominal interest of 10%
• Administration Fee ($20 per employee, per quarter)
• Part 7 Penalty (up to 200% of the SGC)

As you can see, the consequences for not seizing this opportunity to rectify an SG shortfall could leave your business much worse off in the long run, particularly if the ATO conducts an audit.

Don’t forget about contractors!

It is often thought that superannuation is for employees only.  This is misleading, given payments to contractors who are sole traders can be subject to SG, if they are principally for labour, personal skills and effort.  The ATO has a number of decision-making tools that can assist with this determination, refer Employee / Contractor decision tool and Superannuation Guarantee Eligibility decision tool.

What are the Amnesty Benefits?

The great news is that the 200% penalty and administration fee is waived, however the nominal interest still applies.

Also, any late SG shortfall payments are denied as a deduction for tax purposes.  The major benefit of the amnesty is that the payment of superannuation is tax deductible, and the administration fee will be waived. This could be a significant saving depending on the number of employees, shortfall amount, and length of time the super has been unpaid.

In these volatile times, it is also a fresh reminder that directors can be held personally liable for unpaid SG. The disclosure and payment of unpaid SG could therefore prevent a director’s penalty notice (DPN) being issued for historical shortfalls.

Where to from here?

This is potentially the last opportunity to do so, as businesses transition to Single Touch Payroll (STP) which provides the ATO with real-time data on your SG obligations.

If upon review you do find that some SG payments are outstanding, the next step is to fill out the relevant forms to disclose the shortfall amounts to the ATO. If you’re not sure about your Superannuation Guarantee payments in your business, now is the time to do something about it.

The team at McKinley Plowman can help you identify any potential shortfalls within your previous pay runs, and help you make the necessary declarations and payments within the amnesty period. To find out more about how we can help you, contact us today on 08 9301 220 or visit www.mckinleyplowman.com.au/contact-us/.

written by:

Steven Lisle

Tax Manager Steven Lisle has been part of the McKinley Plowman team since 2007, and in that time has built his repertoire upon delivering industry leading, up-to-date international and Australian tax strategies and consulting services. Steve's clients enjoy the optimised tax outcomes he provides them, especially where complex structures could otherwise lead to significant tax obligations.