man paying superannuation for his staff before amnesty ends

The super guarantee amnesty ends in September – make sure you’re prepared

The amnesty on companies paying backdated super guarantees comes to an end on 7th September. This amnesty was designed to help companies pay back years of payments that may have gone missing, but without any penalties from the government. If you haven’t yet repaid any super guarantee payments that were overdue, read on for what you can do to get through this issue without any excessive expense.

What is a super guarantee?

The super guarantee is a payment required from employers to provide a sufficient level of support to their employees. Employers are obliged to pay a minimum percentage of any eligible employee’s ordinary time earnings (so not including any overtime hours worked) to either a retirement savings account or a super fund. This is a way of ensuring that employees can be secure in their later life without having to worry about their finances getting out of hand.

The percentage rate that a company is expected to pay has varied year on year, ranging from 9% back in 2002 to 12% up until the middle of 2028. These contributions should be made on a quarterly basis so employees are not punished for leaving their employment in the middle of a year, and get the full payments that they are entitled to. As an employer, your payment of the super guarantee is enshrined in law and can lead to fines in the form of the super guarantee charge (SGC) if your payments go unfulfilled.

What is the super guarantee amnesty?

Effectively, the super guarantee amnesty means that if you have any undisclosed and unpaid super guarantee payments dating back from the present day to 1st July 1992, you will be allowed to make these late payments with no punitive action from the government. You will be able to claim a tax deduction on these payments, you won’t be required to pay the administration component of the super guarantee charge (which can reach up to $80 per employee per year) and, importantly, you won’t have a Part 7 penalty applied to your company. These punitive measures can get expensive, so paying off all of the necessary shortfalls by the end of the amnesty will be highly important for your company’s finances.

Why do I need to act now?

You may wonder, “I’ve kept the unpaid super guarantees like that for decades, surely I could ignore the incomplete payments and they’ll still go unnoticed”. On the contrary, the Australian Taxation Office will be looking to clamp down on any unpaid super guarantees in the coming months and years. Thanks to the expansion of data analytics and more frequent reports coming out of super funds in recent years, the ATO will be able to track down and target any companies that have been skipping the necessary payments. Although your company may have hidden these payments for years, in all likelihood any inconsistencies in the books will be rooted out and resolved.

Additionally, following the superannuation amnesty, the charges for not disclosing your super guarantee shortfall will significantly increase. Of course, you will be liable for the cost of the unpaid super guarantee amounts, but you will also face the cost of $20 per employee per quarter that has been unpaid, a general interest charge, nominal interest of 10%, and the Part 7 penalty that you would typically expect to pay will be increased, potentially to double the regular figure. It is significantly within your financial interest to resolve any outstanding super guarantee payments within this time frame.

How can I resolve this?

One important step is in disclosing the unpaid super guarantees. Whilst this won’t entirely eliminate the charges in and of itself, the disclosure will remove any penalties that you would receive had the ATO discovered the discrepancy themselves. This can remove tens of thousands of dollars from the potential cost of the penalties.

Additionally, the ATO is well aware that many companies will be unable to pay off outstanding super guarantees in the required time frame. You can still participate in the amnesty if you apply by the 7th September 2020, but it is important to note that only payments made before this date will be deductible once a payment plan is put in place.

Can somebody help me with this?

Importantly, you may require an accountant firm to ensure that your books are all in order. If your company has incomplete financial information, it can be almost impossible for an untrained eye to spot any discrepancies. A well-trusted and reputable financial services company such as Pherrus Financial Services will look through your financial history with a fine-toothed comb to establish exactly what you need to do to make the most of the super guarantee amnesty.

Your company could be in serious trouble if you fail to take advantage of the super guarantee amnesty. Get in touch with Pherrus Financial Services today for further financial guidance and advice.

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