On 24 May 2018, the Government announced a 12 month superannuation guarantee (SG) amnesty that proposes to give employers an opportunity to rectify past SG non-compliance without penalty.
If the Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2018 (SG bill) is ever made law, the amnesty period will apply from 24 May 2018 and run for a 12 month period to 23 May 2019.
We therefore recommend that Treasury and the Australian Taxation Office (ATO) consider introducing the amnesty when the law is actually passed rather than relying on legislation which still has to be passed by Parliament which will then have retroactive application to 24 May 2018.
The amnesty is already being actively promoted when no law exists and employers are already coming forward without reading the finer detail that the amnesty is subject to the passing of the SG bill into law. Further, the 12 month period already commenced to tick away on 24 May 2018 when the SG bill was tabled in Parliament and no one knows when, if ever, the SG bill will become law. In particular, it is understood that the Labor Government may not support the amnesty.
The many employers that have already made disclosures to the ATO on the basis of the proposed amnesty may have therefore been misled. However, the ATO will broadly treat these as voluntary disclosures if the SG bill fails to become law.
What is the SG amnesty?
Under current law, failure to contribute the minimum 9.5% of an employee's ordinary time's earnings to the employee's superannuation fund by the required time can result in a liability to pay the following:
- SG charge (a sum of the total of each relevant employee's SG shortfalls, nominal interest component, and a $20 per employee per quarter administration component),
- Penalties (known as Part 7 penalties) for failing to provide information or a statement as required under the law, which can be up to 200% of the amount of the SG charge, and
- General interest charge imposed where the SG charge or Part 7 penalties are not paid by the due date.