On 6 March 2020, the Government reintroduced legislation to establish a one-off amnesty for historical underpayment of the superannuation guarantee (SG). The amnesty, which was originally announced in May 2018 but failed to make it through parliament, will now run until 7 September 2020.

SG amnesty for employers

The amnesty will enable employers to report and pay any outstanding superannuation that is owing to their employees, without incurring late payment or administration fees. However, employers will still be required to pay all that is owing to their employees, including interest.

The amnesty will apply to super guarantee shortfalls from 1 July 1992 to 31 March 2018. Any shortfalls for quarters starting from 1 April 2018 will not be covered by the amnesty.

“Since the one-off amnesty was announced, over 7,000 employers have come forward to voluntarily disclose historical unpaid super,” Senator Jane Hume, the Assistant Minister for Superannuation, Financial Services and Financial Technology said.

“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.”

Benefits of the SG amnesty

Employers who take advantage of the amnesty will have the opportunity to self-correct SG payments without facing excessive penalties. If employers are found guilty of underpaying SG contributions as part of an ATO audit, they will have to pay the following fees:

• SG shortfall
• Nominal interest (10%)
• Administration fee ($20 per employee per quarter)
• Part 7 penalty (up to 200% of the SGC)
• The general interest charge (GIC)

Eligibility for the amnesty

To be eligible for the amnesty, an employer must voluntarily disclose SG shortfalls to the ATO. Employers who are guilty of underpaying employees are obligated to reimburse their employees in full or set up a payment plan with ATO if they are unable to pay the debt all at once. If an employer defaults on a payment plan, they will no longer qualify for the SG amnesty.

Employers who wish to take part in the amnesty must fill in an SG amnesty form via the ATO website. If they are not eligible for the amnesty or have unpaid super for quarters that are not eligible, they must still lodge an SGC statement.

What happens next

If you believe that you are paying your employees SG contributions, but are not 100% sure, it may be a good idea to undertake a payroll audit. This will confirm whether your payroll calculations are correct and ensure that you are paying your employees their full entitlements, as set out in the law and legislation.

If your business has engaged any contractors during the amnesty period, this also needs to be reviewed as they are still classified as employees under the SG provision, even if both parties have decided that they should be treated as contractors.

The SG amnesty is a good opportunity for employers to review their SG contributions and get their payments back on track, but it is also a complicated issue to contend with. If you would like more information regarding the amnesty or if you would like a review undertaken of your SG contributions, contact The SMSF Accountant today.