Time is running out
In the midst of dealing with the government restrictions imposed on businesses, the Jobkeeper scheme and health concerns for family, staff and customers as well as clients there is a lot to consider with ongoing changes. Those who plan to take advantage of the Federal Government’s Superannuation Guarantee Charge (SGC) amnesty might have forgotten that they only have until 12.59 pm on Monday 7 September 2020 to calculate their SGC shortfalls and lodge their amnesty disclosure form with the ATO.
The amnesty
The amnesty is intended to be a once only opportunity for employers who have undeclared SGC obligations to “wipe the slate clean” on a concessional basis.
An employer will qualify for the amnesty in relation to the employer’s SG shortfall for a quarter if:
- during the amnesty period, the employer discloses to the ATO, in the approved form (which is basically a special SG statement), the information required by the ATO,
- the SG shortfall is in respect of any quarter from 1 July 1992 to 31 March 2018, and
- the employer has not been previously informed by the ATO that it is examining (or intends to examine) the employer’s SG compliance for the relevant quarter.
The amnesty is not available in relation to SG shortfall amounts that have been previously disclosed to the ATO before the amnesty period (but can apply to the disclosure of additional amounts of SG shortfall in the same quarter).
If an employer qualifies for and takes advantage of the amnesty:
- the SG shortfall will still be payable, but payments made in the amnesty period will be tax-deductible,
- to the extent that contributions are offset against SGC imposed in relation to SG shortfalls qualifying for the amnesty, contributions made during the amnesty period will be tax-deductible,
- the threat of the 200% administrative penalty for late lodgement is removed, and
- the $20 per employee per quarter administrative component will not be payable.
The notional interest component and any general interest charge will still be payable.
Employers who wish to take advantage of the amnesty but have difficulty paying the SGC by the due date can negotiate with the ATO to pay the amount under a payment arrangement, but payments must be made during the amnesty period in order to be tax deductible.
As an additional incentive to take advantage of the amnesty, if the ATO later finds an unpaid SGC obligation which could have been subject to the amnesty, an administrative penalty of at least 100% will be imposed.
Clients should also remember that while calculation of the minimum contributions required to escape an SG shortfall are based on “ordinary time earnings” (OTE), calculation of the shortfall itself is based on “wages or salary”, and there are items included in wages or salary which are not included in OTE. The most important of these are payments for overtime hours, annual leave loading which is demonstrably referable to a loss of opportunity to work overtime, and termination payments for unused annual leave, long service leave or sick leave.
Bearing in mind that it often takes longer than anticipated to put together the disclosures required and payment must be made within the amnesty period to be tax deductible, we recommend you contact your Nexia Advisor promptly if you wish to take advantage of the amnesty.
