Sue Liebert from BridgePoint Group provides expert insights into the Superannuation Guarantee Amnesty Bill.
The Superannuation Guarantee Amnesty Bill goes a little bit like this.
All employers have an obligation to pay superannuation for their employees. They have to pay it on a timely basis and the employees get the credit in their superannuation funds. However, in some cases, employers have been a bit remiss about paying that superannuation. Possibly due to cash-flow issues and they’ve fallen behind. It’s fallen into the “Too Hard Basket” for some employers.
The issue is if you don’t pay your superannuation by the due date as an employer you have to lodge a superannuation guarantee statement and pay a superannuation guarantee charge. That is a fairly unattractive thing for an employer. There are penalties involved and the employer doesn’t get a tax deduction for the super guarantee charge. Whereas they would get a tax deduction for the superannuation.
A lot of employers don’t actually lodge the Superannuation Guarantee charge form. The problem is if directors don’t do that the Australian Tax Office (ATO) can come after the director personally if a company doesn’t pay with a director penalty notice.
Directors can be liable personally for unpaid superannuation, particularly if they haven’t lodged the super guarantee charge form. If you haven’t notified the (ATO) on a timely basis, you don’t have the option to place a company into liquidation to get out of that obligation.
So that is the background of the superannuation rules.
The reason for the Superannuation Amnesty is to get employers up-to-date in their superannuation and employers to lodge a superannuation guarantee statement to avoid penalties. By lodging a superannuation guarantee statement, they can claim a tax deduction for the amount. This is a great opportunity for employers to get up-to-date on their super without getting penalised severely for it.
The Superannuation Guarantee Amnesty (SGA) is effective for six months. It is a very small window of opportunity for companies to take advantage of the Amnesty and get their deductions up-to-date.
During the SGA, employers will have to pay the superannuation and pay any interest charge on that superannuation. The SGA only relates to superannuation for a certain period, and that’s old superannuation from 1992 up to 31 March 2018. If you don’t voluntarily disclose, and don’t pay your superannuation, and don’t take advantage of the Amnesty, watch out.
Once the SGA is finished, the Australian Tax Office will pursue employers who haven’t taken advantage of the Amnesty. The fines and penalties can be up to two hundred per cent of the amount of superannuation that you haven’t actually remitted on top of the superannuation that you have remitted. So, the penalties can be quite severe.
Anyone looking to utilise the Amnesty, it will be a hit to their pocket. You have to pay the interest no matter what. Employees haven’t had the benefit of that superannuation, so you need to compensate them with a charge that the ATO makes you pay. Add to that (and you will always have to end up doing that) the extra penalties. Plus not being able to claim any of the penalties, interest or superannuation as a tax deduction, that is a really really big stick that the ATO can hit you with.
The SGA is an opportunity available for a short period of time.
Sticking your head in the sand because the ATO has not come knocking is not a good strategy. The ATO will eventually come knocking. Most employees tend to notice if they don’t get their super and it’s monies that are rightfully theirs. The ATO has plenty of ways for employees to air their grievances.
If the employers want to discuss with us whether they think they may have liability, we can help them assess whether there is a liability. If we determine that there is a liability we can assist in their preparation and lodgment of the form within the period of time to take advantage of the SGA.
For employers, if you do have any historic superannuation that you haven’t paid, contact BridgePoint Group and we can help you get up-to-date.