Tag: SG

Superannuation Amnesty – Now Law

This week the Parliament passed legislation to enact the Superannuation Amnesty. 

The Amnesty is designed to encourage employers to come forward and disclose past quarters (from 1 July 1992 to 24 May 2018) where they have not paid Superannuation Guarantee (SG) to employees in full (i.e. an SG shortfall still exists). 

The Amnesty period in which employers can come forward is from 24 May 2018 and ends six months after the date the legislation receives Royal Assent (therefore until at least late August 2020). 

Under the Amnesty, the employer in coming forward will enjoy the following benefits: 

  • Tax deductions for payments of the SG Charge (these would otherwise not be tax deductible) 
  • No administrative penalty of $20 per employee 
  • No Part 7 penalties (which could otherwise be 200% of the SG Charge owing). 

It is anticipated more than 7,000 additional employers will come forward now that the legislation has passed. 

Given that SG non-compliance can now be more easily detected by the ATO, non-complying employers should strongly consider their options. 

Employers who do wish to take advantage of the Amnesty should contact the ATO. 

 

Superannuation Amnesty is back on the table!

The Government’s superannuation amnesty for employers is now back on the table! 

The Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019 was introduced into the House of Representatives on 18 September 2019. It seeks to legislate the super guarantee amnesty that the Government failed to pass into law before the Federal Election. The legislation provides for a one-off amnesty to encourage employers to self-correct historical SG non-compliance. 

Specifically, an employer that qualifies for the amnesty in relation to their SG shortfall for a quarter: 

  • Will have the administrative penalty waived ($20 per employee, per quarter) 
  • Will have Part 7 penalties waived (this can be an additional penalty of up to 200% of the shortfall owed) 
  • Will be able to deduct the late shortfall contribution (under current law, late payments cannot be deducted). 

The beneficial treatment provided by the amnesty is available for a quarter that ends at least 28 days before the start of the amnesty period. This means that the beneficial treatment provided by the amnesty is available in relation to the quarter starting on 1 July 1992 (which is the day that Superannuation Guarantee commenced) and all subsequent quarters until and including the quarter starting on 1 January 2018. An employer will not be able to benefit from the amnesty for SG shortfalls relating to the quarter starting on 1 April 2018 or subsequent quarters. 

To qualify for the amnesty, a disclosure must be made by an employer during the amnesty period. The amnesty period is the period that started on 24 May 2018 and ends 6 months after the day the legislation is passed (therefore, at least until March next year if the legislation passes next month). 

On releasing the legislation, the Assistant Treasurer said.   

Since the one-off amnesty was announced, over 7,000 employers have come forward to voluntarily disclose historical unpaid super. The ATO estimates an additional 7,000 employers will come forward due to the extension of the amnesty. This means around $160 million of superannuation will be paid to employees who would otherwise have missed out. 

The amnesty reinforces recent changes to the superannuation system to improve the visibility employees have over their superannuation. We have given the ATO greater powers to ensure employers meet their obligations, and to help ensure employees receive their superannuation entitlements. The Government’s legislated package of integrity measures – part of the Treasury Laws Amendment (2018 Measures No. 4) Act 2019 – includes up to 12 months jail for employers who continue to do the wrong thing by their workers, and gives the ATO near real-time visibility of how much SG employees are owed and the contributions they actually receive. 

This is a practical measure that is all about reuniting hardworking Australians with their super. My message to employers who owe super is: come forward now. Do not delay. This is a one-off opportunity to set things right, and going forward the ATO has the tools to spot unpaid super. 

Irrespective of whether the amnesty passes into law, all employers should strongly consider getting their superannuation affairs in order. There is now real time, and more granular reporting of superannuation liabilities and payments – down to the employee level. The ATO will now know in close to real time if an employer is not paying superannuation in respect of any employee. Therefore, it will be in a position to immediately follow up late payers. 

 

Director Remuneration & Superannuation

Question – We have a small business set up as a company. My partner and I are the directors. We would both rather not pay super. The money could be far better spent in the business. Is there any way to get out of not paying?
Answer
TYPES OF PAYMENT TO A DIRECTOR: At the outset, it’s worth noting that there are a variety of ways that a director or stakeholder of a company can receive remuneration including via ‘Directors Fees’, Directors Salary, fringe benefits, dividends, even as a contract style payment (in very unusual circumstances) etc.

SUPERANNUATION: All fees paid to a company Director are earnings in respect of the Director’s ordinary hours of work. As such, they attract Superannuation Guarantee (SG). Director SG payments must, as with payments to employees, be made to the nominated superannuation fund or a Superannuation Clearing House as the case may be. It’s against the law to make them directly to the Director (irrespective of any written agreement in place between them and the company).

YOUR QUESTION As noted, drawing payments such as a salary from the company would attract SG and this cannot be avoided or contracted our of. To minimise the company’s SG obligations, you could discuss with Accountant the possibility of being remunerated solely by way of a dividend (such remuneration does not attract SG). Alternatively you could consider restructuring into a Partnership or Trust structure (in those cases, distributions of profit generally do not attract SG). To this end, we note the Government’s recently introduced Small Business restructure rollover which allows small business owners to change their operating structure without incurring CGT or income tax, subject to various conditions being met.