Australia launches 12-month pension guarantee amnesty Australia launches 12-month pension guarantee amnesty

Australia launches 12-month pension guarantee amnesty
11 Jul 2018

Australia's Minister for Revenue and Financial Services has announced a 12-month pension guarantee amnesty that will apply retrospectively from 24 May 2018 to 23 May 2019.  

The amnesty comes in the form of a Treasury Laws Amendment. It will allow employers to self-report and correct previous undeclared superannuation guarantee (SG) shortfalls that occurred between 1 July 1992 and 31 March 2018.

If employers do so, they will be required to pay the SG shortfall plus interest, but will not be subject to penalties or charges - including administration fees of AUS$20 (US$14.85) per employee per quarter - which usually applies to late payments.

Most significantly, and unlike the situation with the superannuation guarantee charge (SGC), any catch-up payments of SG shortfalls made through the amnesty will be tax deductible.

The Australian Taxation Office (ATO) has warned employers that failing to take the opportunity provided now will result in harsher penalties in future. To be eligible for the amnesty, employers must voluntarily disclose their SG shortfall amount, including nominal interest. They also need to report any previously undisclosed SG shortfall and not be subject to an SG compliance audit during the relevant period.

Once employers calculate how much they need to pay, there are two options. If they are able to pay the shortfall and nominal interest in full, they can do so directly into the affected employee’s pension fund, and complete and lodge the Amnesty Fund payment form.

Otherwise, employers will need to complete and submit the Amnesty ATO payment form and enter into a payment plan with the ATO.

Once the relevant form is completed, it will need to be submitted electronically through the ATO’s Business Portal or by a tax or BAS agent. Employers will receive confirmation from the ATO as to their eligibility to take part in the scheme.

If they are not eligible, the ATO will amend their assessment to include payment of administration fees (AU$20, or US$14.85, per employee per quarter) in their SGC liability. A Part 7 penalty will be imposed and should be remitted in accordance with the ATO’s usual practices. SGC payments and contributions used to offset it will not be tax deductible.

According to lawyers Norton Rose Fulbright, employers should take advantage of the amnesty to put their superannuation guarantee affairs in order. They should also conduct a review of their superannuation practices to ensure they comply with all applicable legislation and that all relevant contributions have been paid for current and former employees and, where required, contractors.  

 Emma Woollacott

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

Australia's Minister for Revenue and Financial Services has announced a 12-month pension guarantee amnesty that will apply retrospectively from 24 May 2018 to 23 May 2019.  

The amnesty comes in the form of a Treasury Laws Amendment. It will allow employers to self-report and correct previous undeclared superannuation guarantee (SG) shortfalls that occurred between 1 July 1992 and 31 March 2018.

If employers do so, they will be required to pay the SG shortfall plus interest, but will not be subject to penalties or charges - including administration fees of AUS$20 (US$14.85) per employee per quarter - which usually applies to late payments.

Most significantly, and unlike the situation with the superannuation guarantee charge (SGC), any catch-up payments of SG shortfalls made through the amnesty will be tax deductible.

The Australian Taxation Office (ATO) has warned employers that failing to take the opportunity provided now will result in harsher penalties in future. To be eligible for the amnesty, employers must voluntarily disclose their SG shortfall amount, including nominal interest. They also need to report any previously undisclosed SG shortfall and not be subject to an SG compliance audit during the relevant period.

Once employers calculate how much they need to pay, there are two options. If they are able to pay the shortfall and nominal interest in full, they can do so directly into the affected employee’s pension fund, and complete and lodge the Amnesty Fund payment form.

Otherwise, employers will need to complete and submit the Amnesty ATO payment form and enter into a payment plan with the ATO.

Once the relevant form is completed, it will need to be submitted electronically through the ATO’s Business Portal or by a tax or BAS agent. Employers will receive confirmation from the ATO as to their eligibility to take part in the scheme.

If they are not eligible, the ATO will amend their assessment to include payment of administration fees (AU$20, or US$14.85, per employee per quarter) in their SGC liability. A Part 7 penalty will be imposed and should be remitted in accordance with the ATO’s usual practices. SGC payments and contributions used to offset it will not be tax deductible.

According to lawyers Norton Rose Fulbright, employers should take advantage of the amnesty to put their superannuation guarantee affairs in order. They should also conduct a review of their superannuation practices to ensure they comply with all applicable legislation and that all relevant contributions have been paid for current and former employees and, where required, contractors.  

 Emma Woollacott

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

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