Employers will have a six month amnesty to correct all historical superannuation shortfalls, following the passage of key legislation.

The Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019 passed both Houses of Parliament on Monday 24 February , and is awaiting Royal Assent.

The amnesty includes underpayments outside a payroll system, such as superannuation contributions to contractors, directors and expatriates.

The key details regarding the amnesty are that it:

• only applies for six months from the time the Bill receives Royal Assent, so organisations should act quickly (identifying and quantifying errors can take time);
• results in no penalties applying for failing to lodge a SGC statement (in usual circumstances this can be up to 200 percent of the SGC amount);
• only applies to shortfalls up to quarter ending 31 March 2018, but as far back 1992, being when the Superannuation Guarantee regime was introduced;
• does not reduce the 10 percent interest included in the Superannuation Guarantee Charge (SGC) as this interest is paid into an employee’s superannuation fund to compensate for any earnings within the fund had there not been a shortfall;
• allows tax deductions for SGC amounts disclosed within the amnesty (normally SGC is not tax deductible);
• waives the administration fee ($20 per employee for each quarter there is a shortfall); and
• is only available if the Commissioner has not informed the employer that they are examining (or intend to) their obligation to pay superannuation for a quarter.

Unlike other taxes, after the amnesty ends the Commissioner will not be able to provide any penalty remission below 100 percent - even if the organisation took reasonable care or has a reasonably arguable position.

Over 7,000 employers have already voluntarily disclosed their historical underpayments, and a further 7,000 are expected to come forward during the amnesty.

Assistant Minister for Superannuation, Financial Services and Financial Technology Jane Hume has stated that the total superannuation expected to be paid as a result of the amnesty will be approximately $230 million.

The increased media scrutiny on employers combined with the revenue authorities’ real time access to wage information through Single Touch Payroll means that it’s vital that employers are proactive in ensuring compliance with superannuation and wage payments. This amnesty provides employers with a one-off opportunity for employers to correct historical errors.

The KPMG Employment Taxes and Tax Controversy teams can stress test organisations’ proposed disclosures for eligibility based on our experiences in dealing with the ATO in these circumstances.

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