Over recent years we have noticed the ATO applying more and more resources in the area of Super Guarantee. Super Guarantee is the compulsory 9.5% super that employers must pay to an employee’s super fund.
We are seeing many more audits based on complaints from employees who’s super has not being paid, along with the usual random checks that the ATO performs. The ATO’s data matching capabilities have improved over time which allows the ATO to more easily pick up employers underpaying super.
More recently we have seen the introduction of compulsory electronic reporting of super for employees which further assists the ATO’s data collection efforts.
There are currently very harsh penalties for employers not paying super for employees, or even just paying it late. The Super Guarantee Charge is a penalty equal to the amount of super not paid. In the case of an ATO audit, the ATO would require this to be paid in addition to the amount of unpaid super – that’s a 100% penalty! Further, if the super is paid late, the ATO can disallow a tax deduction for the super payments.
In an attempt to encourage employers who are aware of unpaid super payments to catch up, the government has introduced legislation into parliament to offer an amnesty period to get all unpaid super up to date.
The super guarantee amnesty applies to any super calculated from 01 July 1992 to 31 March 2018 and must be used by 24th of May 2019. If the amounts of unpaid super are declared to the ATO in the correct form and paid by the due date the Super Guarantee Charge penalty will not apply and the payment will be tax deductible. There will be some interest on the late payments though.
Bizarrely, at the time of writing this blog, the legislation to enact the super guarantee amnesty has still not yet passed parliament, so we can’t be sure whether amounts declared and paid under the amnesty will receive the penalty free and deductible treatment. And there’s not many sitting days left in parliament for the legislation to pass before the next election.
The ATO website states: If you’ve missed a payment or haven’t paid an employee’s super on time, you should lodge an SG charge statement and pay the amount owing to us. We will apply the current law to this statement however, if legislation is enacted, we will apply the benefits of the proposed amnesty retrospectively.
Further they state: Employers who do not disclose their SG shortfalls during the amnesty period may face harsher penalties if they are audited in the future.
So businesses with outstanding super are in a quandary – should they take advantage of an amnesty that might not even apply, before the amnesty date passes?
If you would like to speak to one of our accountants about unpaid super, call us on (08) 93355211 to make an appointment.
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Author: Heather Cox