The Commonwealth Government has proposed an amnesty for employers who are not compliant with superannuation guarantee laws.
The amnesty is outlined in the Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2018, which was introduced into Commonwealth Parliament on 24 May 2018. If legislated, the amnesty will allow employers to correct certain failures to make superannuation contributions in the past with significantly less potential cost than they would usually face.
As most people will be aware, under superannuation guarantee legislation, an employer must make contributions on behalf of each eligible employee at least quarterly into a complying superannuation fund. The current level of these contributions is 9.5% of the employee’s ordinary time earnings, although this is scheduled to climb to 12% by 1 July 2027. The ATO has estimated that, in 2014-2015 alone, employers failed to pay approximately $2.85 billion in superannuation contributions.1
There has been an increasing focus by governments in recent times to introduce measures to address the failure of some employers to provide employees the benefits to which they are entitled, including wages and superannuation. While the proposed amnesty can be viewed as a ‘carrot’ approach, there are number of examples of governments adopting a ‘stick’ approach with significantly enhanced compliance requirements and greater penalties. For example, the Fair Work Act 2009 was amended in September 2017 to increase penalties for ‘serious contraventions’ and failures to maintain pay records. Penalties for serious contraventions are now ten times higher than the penalties for other contraventions.
As proposed, the amnesty will operate until 24 May 2019; 12 months after it was first announced by the Government. It will apply for employers who voluntarily (and before being audited by the ATO) disclose a superannuation guarantee shortfall from the period 1 July 1992 to 31 March 2018 that has previously been undeclared. By taking advantage of the amnesty, employers will:
- not be charged an administrative fee of $20 per employee per quarter for processing any late payments;
- be able to treat payments made as a tax deduction; and
- avoid penalties – such as a penalty for failing to lodge a superannuation Guarantee Charge Statement on time (which can be up to 200% of the charge payable).
Employers will still be required to make the superannuation guarantee contributions due to employees, as well as pay interest on those contributions, with the intention that employees will not be financially disadvantaged by late payments. Further, for employers who do not take advantage of the amnesty, the failure to do so will be assessed as a part of the decision as to the amount of any penalty to be imposed; and it is intended that a minimum penalty of 50% of the charge payable will be imposed on any employer who could have come forward during the amnesty but does not.
Please note that the amnesty has not yet been enacted into legislation. We will keep you updated about its progress through the Commonwealth Parliament. Regardless of the eventual outcome of the legislation, the proposed amnesty again highlights the need for maintenance of adequate employment records. While non-compliance with record-keeping was once seen as a minor technical oversight, it now carries such heavy penalties that employers simply cannot afford to overlook their obligation.
If you would like to assess your superannuation guarantee obligations and discuss your options, do not hesitate to contact us.
Conor McNair | Lawyer | +61 2 8248 5872 | email@example.com
1 O’Dwyer, Kelly (24 May 2018) Tackling non-payment of workers’ superannuation (online) Available from: http://kmo.ministers.treasury.gov.au/media-release/056-2018/