Employers can avoid penalties for super underpayments
The new Treasury Law Amendment on Unpaid Superannuation provides amnesty for employers who voluntarily disclose superannuation underpayments, avoiding penalties and offering employees compensation
Taking the confusion Away
The Treasury Law Amendment on Unpaid Superannuation, effective March 6, addresses confusion from a 2018 amnesty and allows employers to avoid penalties by disclosing underpayments.
Exemption for late-payment Fines
The legislation, formerly known as the Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019, provides an exemption from late payment fines for voluntary disclosures of underpaid Superannuation Guarantee.
Zero penalties
Employers disclosing unpaid superannuation between May 24, 2018, and September 7, 2020, can benefit from amnesty, including compensation for employees and deductible expenses without penalties.
Treasury Law Amendment on Unpaid Superannuation finally passed the Parliament and effectively became a law since 6th of March this year.
This is in relation to the confusion on amnesty announcement made in 2018 when some employers revealed superannuation underpayment activities, but the legislation did not pass Parliament. Nonetheless, employers who have unintentionally disclosed in the most inappropriate time was able to apply for Australian Taxation Office discretion to avoid penalties.
Previously known as the Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019, it introduced changes to the Superannuation Act and relevant tax legislation to facilitate the rehabilitation of unpaid Superannuation Guarantee by creating a conditional exemption from late payment fines for workers who report that they previously underpaid SG.
Employers who have disclosed voluntarily from 24 May 2018 until 7 September 2020 regarding deficits on superannuation guarantee contributions, will be eligible for amnesty. On the other hand, ATO-identified underpayments made by employers without any disclosure does not apply for amnesty.
Employers who voluntarily disclosed superannuation guarantee deficits within a specified time are eligible for amnesty.
Employees will receive the underpaid amount plus a 10% interest compensation from employers once an amnesty is granted.
Employees will be paid the amount of underpayment and receive a 10% interest charge (compensation) from the employers once an amnesty has been made. In the same manner, the employers do not need to pay a penalty, can claim the payment as a deductible expense (except for payments beyond 7 September), and do not need to pay usual administrative charge as part of the amnesty benefits.
When to apply for amnesty:
- When employers have scope misconceptions on “ordinary time earnings” as basis for calculation
- When employers don’t pay super contributions for contractors who essentially labored
