Superannuation guarantee amnesty – ATO supporting employers affected by COVID-19

Superannuation guarantee amnesty – ATO supporting employers affected by COVID-19

08 April 2020 Authored by: Fletch Heinemann, Elise Emmerson, Sarah Lancaster   |   Topics: Superannuation, Tax and revenue, Professional advisers

The superannuation guarantee amnesty (SG amnesty) window is currently open. The main risk with the SG amnesty is making a disclosure, but not being able to pay the superannuation guarantee charge (SGC) – in which case, the benefits of the amnesty will not apply.

Many employers are dealing with the negative impacts from coronavirus. This creates a potential tension between:

  1. employers taking advantage of the SG amnesty and making a disclosure of any historical shortfalls
  2. the risk that employers who do make disclosure may not be able to pay the resulting SGC.

This tension is something a lot of business are dealing with given the recent impacts of coronavirus .

The SG amnesty commenced on 6 March 2020. Employers have until 7 September 2020 to take advantage of the amnesty for the March 2018 and earlier quarters – please see our previous article for further information on the SG amnesty.

The SG amnesty offers a number of incentives. The table below sets out the advantages.

FactorAmnesty conditionsNormal conditions
SGC shortfallDeductible*Not deductible
Contributions offset against SG chargeDeductible*Not deductible
Admin componentWaived$20/ per employee/ per quarter
Nominal interestStill appliesStill applies
Part 7 penaltiesWaivedMaximum penalty is 200% of the SGC.
The amnesty will result in the Commissioner losing the ability to remit the penalty below 100% for historical quarters in all but ‘exceptional circumstances.
Payment planAmnesty conditions fail if:
• -payment is not made by the end of the amnesty period; or
• -a payment arrangement is not in place by the end of the amnesty period.
Subject to the usual ATO debt policies

However, these incentives will not apply if an employer is not able to pay the SGC.

The ATO has recognised that employers may wish to apply for the SG amnesty but be concerned about having to pay the liability because their financial circumstances have changed, or may change, because of coronavirus.

Recognising that tension, the ATO has said that it will work with employers to ensure that any payment plan is flexible to help them to continue making payments.

Payment plans may extend beyond 7 September 2020. However, any payments made after 7 September 2020 will not be deductible.

If employers cannot repay the SGC, the amnesty will not apply – the ATO does not have the power to change this. However, the ATO has said that:

  • employers will only be disqualified from the SG amnesty for the unpaid quarters
  • it will advise employers which quarters are unpaid and re-apply the administration component of $20 per employee for those quarters
  • it will take into account the employer’s circumstances when deciding whether the Part 7 penalties (maximum penalty of 200% of the SGC) should be applied, which may result in the Part 7 penalties being reduced to nil.

If you have any questions or concerns about paying the right amount of compulsory superannuation, or entering into a payment plan with the ATO, please get in contact with us as soon as possible so we can help you manage your response to the amnesty.

Please contact a member of our team if you would like to discuss.

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This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please let us know.