The ATO has recovered around $100 million in unpaid superannuation from employers since the 12-month super guarantee (SG) amnesty was proposed on 24 May 2018.
At a Senate Economics Legislation Committee hearing on 10 April 2019, ATO Deputy Commissioner, Superannuation, Mr James O'Halloran estimated that there has been a 10–15% increase in the number of employers that have come forward and self-reported unpaid SG liabilities in response to the SG amnesty, despite it not yet being law.
The amnesty was announced by the government on 24 May 2018 to enable employers to self-correct historical underpayments of SG amounts until 23 May 2019 without incurring additional penalties that would normally apply. Importantly, a tax deduction would be allowed for payments of the SG charge made during the amnesty which would normally be non-deductible.
As at 28 February, Mr O'Halloran said 19,000 employers have come forward within the normal super guarantee charge (SGC) process for reporting unpaid SG contributions. Of the 19,000 employers that have come forward, the ATO believes that 73% are microbusinesses with less than $2 million turnover, 21% are medium businesses ($2 million to $250 million turnover), and 4% are not-for-profits. The average number of employees is 36.
For most of the disclosures, 51% of the payments are in the order of $10,000, while 35% are $10,000-$50,000 and the balance (14%) are over the spread. In terms of significant employers (1,000 to 5,000 employers), 12 employers have come forward for the period. However, the vast majority (93%) are small to medium businesses. Around 85% of the total declaration of the non-payment or the payment of SG (including nominal interest) is less than $50,000.
With the Bill to implement the amnesty – the Treasury Laws Amendment (2018 Superannuation Measures No 1) Bill 2018 – lapsing on 11 April 2019 when the Federal Election was called, the ATO must continue to apply the existing law.
The ATO says that employers who make a voluntary disclosure of historical SG non-compliance will not be entitled to the concessional treatment under the amnesty, unless and until the Bill is enacted into law. If the Bill is eventually enacted, the ATO will apply the new law retrospectively to voluntary disclosures made during the amnesty period.
In the absence of law to implement the amnesty, no-one can claim a deduction for SG payments as it currently stands. The ATO also cannot waive the $20 administration fee. However, the ATO still has a discretion to remit the additional Pt 7 penalty (200%) as part of its normal practice for voluntary disclosures under the current law and practice statement.
Mr O'Halloran also noted that many of the employers that have come forward would not be eligible for the amnesty anyway, primarily because they were still currently under audit by the ATO, or had reported outstanding SG in relation to periods after May 2018 that wouldn't be covered by the amnesty.
Employers that may be waiting for the amnesty to become law before making a voluntary disclosure should be mindful that they may already be in the ATO's sights. The introduction of the Single Touch Payroll (STP) regime, and event-based reporting obligations for super funds, means that the ATO will increasingly have more data to identify SG non-compliance much earlier than previously.
While employers who make a voluntary disclosure before the amnesty is passed into law run the risk of never receiving the concessional treatment under the amnesty, they could be in an even worse position when the ATO eventually catches up with them.
In this respect, employers with historical SG non-compliance need to be ready to make a voluntary disclosure (even without the protection of the amnesty) before the ATO begins an audit or review. This should at least place the employer in a better position to request the ATO remit some of the penalties, especially the additional Pt 7 penalty (200%) for failing to provide an SGC statement.