The super guarantee amnesty which allowed employers to come forward to declare any super guarantee (SG) shortfalls and self-correct SG underpayments with reduced penalties has officially ended. For businesses eligible for the amnesty, the work is not over, to retain the benefits of the amnesty, the super guarantee charge amount disclosed in the application must either be paid in full or a payment plan must be entered into. For businesses that are not eligible for the amnesty, the ATO has outlined its proposed treatment including administrative penalties.
The government’s super guarantee amnesty has now officially ended. If your business applied to the ATO and the application was received on or before the cut-off date of 7 September, your work isn’t done yet. Remember, to retain the benefits of the amnesty, your business is required to either pay the amount in full or enter into and adhere to a payment plan for any unpaid amounts.
So, if the ATO has advised your business that the disclosure you made was eligible for the amnesty, you must pay the super guarantee charge (SGC) amount disclosed in the amnesty application directly to the ATO. It shouldn’t be paid to your employees’ super funds or through a clearing house.
Due to the current economic situation, it is understandable that many businesses are unable to make such payments in full. If your business finds itself in that situation, you can contact the ATO to establish a payment plan which allow you to retain the benefits of the amnesty. According to the ATO, payment plans include arrangements which have flexible payment terms and amounts and can be adjusted if your circumstances change.
If you’re on a payment plan, keep in mind that you can only claim a tax deduction for eligible amnesty payments made from 24 May 2018 to 7 September 2020. Any payments made after 7 September are not tax deductible.
In situations where businesses are unable to maintain the agreed upon payment plan, the ATO notes that they will be disqualified from the amnesty and any amnesty benefits will be removed for unpaid quarters. Businesses will be notified in writing that their disclosure is disqualified from the amnesty and will have to pay the usual administrative and other penalties.
If your business made an application for amnesty that was received by the ATO after 7 September 2020, it will be treated as a standard lodgement of a SGC statement. The ATO will notify your business in writing of the quarters that aren’t eligible for the amnesty and charge you the administration component of $20 per employee per quarter. In addition, the ATO will consider your individual circumstances and decide whether the Part 7 penalty (up to 200%) should be remitted.
The ATO has recently outlined a 4-step penalty remission process including the following:
- set penalty level based on the business’ attempt to comply with their SGC obligations – for example, an employer that lodges an SG statement after the lodgement due date but before any ATO contact would have a base penalty equivalent to 20% of the SGC. On the other hand, where a default assessment is made by the ATO and the employer has demonstrated repeated disengagement, the likely base penalty set would be equivalent to 200% of SGC.
- determine any penalty uplift based on the employer’s compliance history – if an employer has a good compliance history, the penalty will usually remain at the base penalty in the first step. However, if an employer has a poor compliance history, the uplift on the base penalty could be up to 10%.
- other mitigating factors and circumstances – including whether voluntary action was taken prior to compliance action, illness of key employees etc.
- any exceptional circumstances – including natural disasters, severe illness etc.
If you’ve made a disclosure to the ATO and are not sure whether you made the cut off for the amnesty, we can contact the ATO on your behalf. We can also help you work out a payment plan to present to the ATO if you qualify for the amnesty. Contact us today for expert help.