How will the superannuation amnesty law affect you?

Employers now have six months to rectify any unpaid superannuation guarantee (SG) or risk being faced with tough penalties in the future.

The Treasury Laws Amendment Recovering Unpaid Superannuation Bill 2019 was passed by Parliament on 24 February 2020, giving non-complying employers the chance to amend any historical SG shortfalls committed during the period between 1 July 1992 to 24 May 2018. Employers with SG shortfalls after this date will not be able to benefit from the amnesty.

The one-off amnesty was introduced to create a fresh start for non-complying employers to pay their workers what they’re owed in SG. This comes after the ATO estimated an SG gap of $2.3 billion for the 2016-17 income year.

Employers who use the amnesty must also pay the normal interest rate and general interest charge (GIC) when paying owed SG to their employees. However, the ordinary penalties (up to 200% of the SG charge) that would normally apply to late payments would not have to be paid under the amnesty. SG payments made during the amnesty will also bypass the ordinary $20 per employee administration charges.

Employers who use the amnesty to pay SG debts will be able to claim a deduction for SG charge payments and contributions made during the amnesty. They will also be able to pay the SG directly into the super funds of employees instead of passing them through the ATO.

The ATO will continue to undertake its regular audits during the amnesty period and the usual enforcement actions will be taken against noncomplying employers who do not voluntarily use the amnesty to amend their unpaid SG.

Non-complying employers who do not use the amnesty period to rectify their historically unpaid SG will also face higher penalties if they are caught. The penalties may include a minimum 100% penalty as well as the SG charge, which includes a 10% interest and administration fee. If the employer lodges an SG statement late, then the ATO may raise an additional penalty of up to 200%, whereas in normal cases, the ATO can remit this charge to nil.

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