If you run a business which may have a super guarantee shortfall, inadvertent or otherwise, be quick as time is running out to take advantage of the one-off government amnesty. The amnesty was passed by Parliament earlier this year and businesses could be forgiven if they missed the announcement which happened around the same time as COVID-19 started to take hold around the world.
To recap, the super guarantee amnesty allows employers to come forward to declare any super guarantee (SG) shortfalls and self-correct SG underpayments with reduced penalties. The employer can also claim a tax deduction for payments of SG charge or contributions made during the amnesty period. The amnesty applies to historic shortfalls as far back as 1 July 1992 up until the quarter starting on 1 January 2018 (inclusive).
Sadly, the amnesty is due to end on 7 September 2020, less than a month away. To take up the amnesty, businesses must come forward and disclose to the ATO before 7 September and either pay the unpaid amounts of super in full with interest or put a payment plan in place to do so in the future. Any payments made by that date will be tax deductible.
However, the ATO understands and acknowledges that the current economic situation caused by the pandemic may mean that some businesses are unable to fully pay their super guarantee debt by the legislated deadline. Instead, it is encouraging employers to still apply for the amnesty as it has put in place pathways to work with businesses and create payment plans to make good on unpaid super over time.
Meanwhile, the ATO has already released a draft law administration practice statement which outlines its potential approach to penalties after the conclusion of the amnesty. It notes that if an employer does not come forward and take advantage of the amnesty before 7 September 2020, they will face significantly higher penalties when they are caught by the ATO – a minimum 100% penalty on top of the SG shortfall.
In addition, the draft indicates that payments of SGC made after 7 September 2020 will not deductible, even if they relate to SG shortfalls disclosed under the amnesty. Employers may also be liable for Part 7 penalty (up to 200%) for failing to provide an SG statement by the time they were required to do so. The ATO says it will take a very strict approach to penalties where an employer could have come forward voluntarily to disclose an SG shortfall and failed to do so.
It will generally expect remission not to exceed 50% (100% of the SGC) where an employer did not come forward voluntarily and it took ATO compliance action for them to disclose, even for quarters where there is no legislated restriction on remission.