On 18 September 2019, the Government reintroduced legislation to establish a one-off amnesty for historical underpayment of superannuation guarantee (SG). The Bill incentivises employers to come forward and do the right thing by their employees by paying any unpaid superannuation in full.
Employers will not be off the hook – to use the amnesty, they must still pay all that is owing to their employees, including interest. However, the amnesty will encourage employers to come forward and pay outstanding superannuation, by not hitting them with the penalties usually associated with late payment.
Importantly, employers who do not take advantage of the one-off amnesty will face significantly higher penalties when they are subsequently caught – typically employers will face a minimum 100 percent penalty on top of the SG Charge they owe. The SG Charge includes the full amount of SG owed to employees, interest on the SG owed of 10 per cent, and an administration fee of $20 per employee per Quarter. In addition, throughout the amnesty period the ATO will still continue its usual enforcement activity against employers for historical obligations they do not own up to voluntarily.
This new amnesty still applies to disclosures from 24 May 2018 up to six months after this legislation has passed the Parliament.
Normally, if an employer fails to meet their quarterly SG payment on time, they pay the SG charge (SGC) and lodge a Superannuation Guarantee Statement. The SGC applies even if you pay the outstanding SG soon after the deadline.
|What employers pay for failing to meet SG obligations|
|SGC comprised of:||SGC comprised of:|
|Penalties of up to 200% of the amount of the underlying SG charge (minimum 100% for quarters covered by the amnesty)||No penalties|
|A general interest charge if the SGC or penalties are not paid by the due date||A general interest charge|
|SGC amount is not deductible – even if you pay the outstanding amount||SGC amount is deductible|
Even if you do not believe that your business has an SG underpayment issue, it is worth undertaking a payroll review to ensure that your payroll calculations are correct, and employees are being paid at a rate that is consistent with their entitlements under workplace laws and awards.
It is also important to note that if your business has engaged any contractors during the period covered by the amnesty, then those arrangements should be reviewed as it is common for contract workers to also be classified as employees under the SG provisions even if the parties have agreed that the worker should be treated as a contractor. You cannot contract out of SG obligations and SGC could still be payable on payments made to contract workers.
If a problem is revealed, you can correct it without excessive penalties applying under the amnesty. If you are uncertain about what award and pay rates apply to employees, the FairWork Ombudsman’s website has a pay calculator.
If you aren’t positive that your business has paid the correct amount of super for all your employees, give the team at DFK Everalls a call on 6232 4588 and we’ll help you review your obligations, sort out any shortfalls and establish the necessary systems to ensure that you meet all your superannuation obligations correctly and on-time going forward.