Sep 23, 2019 / News

Business Consulting / Taxation

Super Guarantee amnesty back on! Use it, or else!

The Government has entered a Bill into Parliament to reignite the previously lapsed superannuation guarantee amnesty.  But this time it takes a new turn by adding a stick to the carrot.

Amnesty 2.0

Employers will be able to make good on unpaid employee superannuation obligations for the period 1 July 1992 to 31 March 2018.  Normally, when unpaid by the due date (28th day after each quarter), employers instead become liable for the “charge”, being the same amount as the unpaid superannuation, payable to the government, plus an interest component and a $20-per-employee-per-quarter administration fee.  None of that is tax deductible.  The money eventually finds its way to the employees’ superannuation accounts.

Compulsory employer-provided superannuation was never intended to be an additional cost for employers, but rather an income sacrifice by employees to be set aside into retirement savings.  Accordingly, employers who haven’t paid their employee superannuation have effectively fallen short in paying employees their remuneration.  The point of the amnesty is to achieve the outcome of affected employees’ outstanding superannuation entitlements being paid.  Such employees often miss out because the employer is reluctant to fess up and turn a deductible cost they should already have paid into a non-deductible cost.

Under the amnesty, an employer can pay the charge (or pay direct to an employee’s super fund) and interest component, with the administration fee waived, and it all remains tax deductible.  In other words, factoring in the benefit of the time value of money, the employer will be substantially closer to where they would have been, had they paid their employees’ superannuation on time.

The amnesty window will be retrospective to the original announced start date of 24 May 2018, and end six months after the passed Bill receives Royal Assent.  This means those who took up the proposed amnesty in good faith, and were left exposed to the existing law, can breathe a sigh of relief – assuming the Bill passes, of course.

That’s the carrot; now for the stick 

Labor and the Greens in the previous Parliament opposed the amnesty because they felt it was the wrong approach to dealing with what effectively amounts to underpayment of employee remuneration.  Perhaps that’s why Amnesty 2.0 contains a kicker for applicable employers who choose not to avail themselves of it.  And maybe also the government is taking a leaf out of US President Theodore Roosevelt’s strategy book, whose catchphrase was, “Speak softly, and carry a big stick.”

Employers who don’t take up Amnesty 2.0, and who are caught afterwards, will face a minimum 100% penalty on top of the charge, etc., all non-deductible, and with very limited scope for remission of the penalty.  The clear message with Amnesty 2.0 is, “use it, or else!”

Remember that with almost all employers soon required to electronically report in real time under Single Touch Payroll-compliant payroll software, getting caught will be a lot easier.

What you should do

If you have not paid all your employee superannuation obligations, talk to your trusted Nexia Edwards Marshall advisor.  Don’t wait for the Bill to pass – the six-month remaining amnesty period will be a short timeframe to get things sorted.  Better to be ready to go, once the Bill is passed.

At Nexia Edwards Marshall, we can help.  It’s what we do.

The material contained in this publication is for general information purposes only and does not constitute professional advice or recommendation from Nexia Edwards Marshall. Regarding any situation or circumstance, specific professional advice should be sought on any particular matter by contacting your Nexia Edwards Marshall Adviser.