As discussed here and here, the superannuation guarantee (SG) amnesty allowed employers to disclose and pay previously unpaid SG charge, including nominal interest, for the quarters between 1 July 1992 to 31 March 2018 without incurring the administration component ($20 per employee per quarter) or Part 7 penalties. In addition, payments of SG charge made to the ATO under the amnesty were tax deductible.

The deadline for applications made under the amnesty expired on 7 September 2020. So what disclosure options are now available for employers in the post-amnesty period?

Any disclosures of SG shortfalls in the post-amnesty period will now incur the administration component (in addition to the nominal interest) and won’t be tax deductible. In addition, there are numerous penalties for failing to comply with your SG obligations including Part 7 penalties, general interest charge on unpaid amounts and making directors personally liable for SGC. In relation to the Part 7 penalties, the maximum penalty of 200% (ie, employers effectively have to pay the SGC amount three times) is automatically imposed, although the ATO has the power to remit (discussed below).

While the amnesty may have ended there are still benefits in making a voluntary disclosure due to the ATO’s power to remit Part 7 penalties (discussed in more detail here).

Disclosures relating to amnesty period (prior to 31 March 2018)

The extent to which penalties for late, unpaid or underpaid SG amounts for a quarter that was covered by the amnesty (1 July 1992 to 31 March 2018) can be reduced will depend on the following:

• If an employer doesn’t lodge an SGC statement voluntarily, the ATO commences an audit on their SGC obligations and there are no exceptional circumstances that prevented the employer from lodging during the amnesty, the ATO cannot remit the Part 7 penalty below 100% of the SG charge (ie the employer will have to pay the SGC at least twice);

• If the employer lodged an SGC statement voluntarily before an audit or there are exceptional circumstances that prevented the employer from lodging during the amnesty, then normal rules apply – the ATO has the discretion to reduce the Part 7 penalties to nil.

The ATO has confirmed that COVID-19 related difficulties will only point towards a finding of exceptional circumstances if an employer’s ability to lodge has been impacted (for example, if the employer was displaced interstate and unable to access business records). That is, the financial impact alone will not be sufficient.

Disclosures relating to the post amnesty period (after 31 March 2018)

Normal rules apply for the post amnesty period. That is, the ATO has to power to remit the Part 7 penalty in part or in full. A remission is much more likely to occur in the context of a voluntary disclose.

To discuss further or for more information please contact:

Philippa Briglia
Senior Associate
T +61 3 9611 0173
E pbriglia@sladen.com.au

Phil Broderick
Principal
T +61 3 9611 0163  l M +61 419 512 801   
E  pbroderick@sladen.com.au