Superannuation Guarantee Amnesty – worth the wait?

Before turning to the amnesty, it is worth a quick overview of an employer’s obligations to pay superannuation.

Employers are required to pay superannuation if an employee:

• is employed and paid $450.00 or more (gross wage) per month; or
• works more than 30 hours per week and is:
  • under the age of 18 years; or
  • is a “private or domestic worker” such as a nanny, housekeeper or carer.

The minimum amount of superannuation an employer must pay (the superannuation guarantee) is 9.5% of the employee’s ordinary earnings.

Significant penalties apply if an employer fails to pay the superannuation guarantee, including penalty interest, administration fees and the potential for personal liability of the director of the employer if the delays in payment are extensive (which forms part of the “Part 7 Penalties”).

Originally announced in May 2018, the Australian Government has revisited and introduced by royal assent on 6 March 2020 the Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019 (Bill).

The Bill provides an employer an opportunity to catch up on all outstanding superannuation payments for a period up until 7 September 2020. Any superannuation guarantee shortfalls for any quarter from 1 July 1992 to 31 March 2018 may be rectified during the amnesty provided the shortfall had not been previously disclosed and/or the employer is not the subject of a current audit.

The employer must declare and pay all outstanding superannuation during the amnesty period or set up a payment plan. The employer will still be responsible for paying all outstanding superannuation guarantee payments together with interest however, taking advantage of the amnesty provides a significant advantage to employers by allowing:

• for the waiver of the administrative fee payable (being $20 per quarter missed per employee);
• exemption from application of the “Part 7 Penalties”; and
• the amounts paid continue to be tax deductable.

Every employer should take advantage of the amnesty whilst it is available. Once the amnesty period expires on 7 September 2020, your clients will be exposed to the full force of the penalty provisions.

If your clients require assistance during this amnesty period, please contact us.

We’re here to help.

Thomas Hanna, Associate