The Government has resurrected the Superannuation Guarantee (SG) amensty giving employers that have fallen behind with their SG obligations the ability to “self-correct”. This time however, the incentive of the amnesty is strengthened by harsh penalties for those that fail to take action.
Legislation enabling the amnesty is currently before Parliament and if enacted, will apply from the date of the original amnesty announcement, 24 May 2018 until 6 months after the legislation has passed Parliament. Employers will have this period to voluntarily disclose underpaid or unpaid SG payment to the Commissioner of Taxation.
The amnesty applies to historical underpaid or unpaid SG for any period up to the March 2018 quarter.
What Employers Pay for Failing to Meet SG Obligations
|SGC comprised of:||SGC comprised of:|
|– the outstanding SG entitlements||– the outstanding SG entitlements|
|– Interest of 10% per annum||– Interest of 10% per annum|
|– An administration fee of $20 for each employee with a shortfall per quarter||– No administration fees|
|Penalties of up to 200% of the amount of the underlying SG charge|
(minimum 100% for quarters covered by the amnesty)
|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|
Where to from here?
Even if you do not believe that your business has an SG underpayment issue, it is worth undertaking a payroll audit 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.
If your business has fallen behind on its SG obligations and is eligible for the amnesty, you need to start working through the issues now or contact us to work through the issues for you. There are several calculations that need to be completed and these may take some time to complete.
If your business has engaged any contractors during the period covered by the amnesty, then the arrangements will need to be reviewed as it is common for workers to 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.
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 or you can contact them online or call them on 13 13 94.