The government is getting tough on employers’ unpaid compulsory super guarantee (SG) contributions that may be affecting more than 2.8 million workers. Fortunately for businesses, it has recently announced a revised “grace period” to rectify past non-compliance. All businesses should review their super compliance to consider what action they may need to take.
Compliance changes for businesses The launch of Single Touch Payroll (STP) will dramatically improve the ATO’s ability to monitor employers’ compliance with compulsory super laws moving forward. This electronic reporting standard is now mandatory for all Australian businesses, and gives the ATO fast access to income and superannuation information for all employees.
What about past unpaid super you might already owe? You may have previously heard about an “amnesty” for coming forward and voluntarily disclosing historical underpayments of SG contributions without incurring penalties. After many hiccups with implementing this policy in 2018 and 2019, the returned Coalition government has finally taken steps to relaunch the policy.
Under proposed legislation currently before parliament, the amnesty will work as follows: The scheme applies to any unpaid super you still owe dating back to 1992 until the quarter starting on 1 January 2018. To qualify, you must not only disclose but also pay the outstanding contributions – including interest. You must make this disclosure to the ATO before it begins a compliance audit of your business (or informs you it will do so). If you qualify, the ATO will waive certain penalties that would usually apply. You will also be able to deduct your catch-up payments, provided they are made before the amnesty ends. If you don’t come forward and you’re later caught out, the ATO will be required to apply a minimum penalty of 100% on top of the amount of unpaid super you owe (although this can be as high as 200%). The timing of your disclosure is important.
The proposed new amnesty will cover both previous disclosures made since 24 May 2018 (under the old amnesty scheme that the government failed to officially implement) and, importantly, disclosures made up until six months after the proposed legislation passes parliament. While there’s a risk the laws may never pass, be aware that with or without an amnesty, businesses do face significant penalties if they’re caught by the ATO without voluntarily coming forward.