Proposed amnesty to tackle super shortfalls

In May 2018, the Federal Government proposed a new bill that would encourage businesses who have not complied with their employees’ superannuation guarantee (SG) contributions.

Currently law states that employers are required to contribute a minimum percentage (currently 9.5%) of their employees’ ordinary time earnings (OTEs) into superannuation. Should they fail to do this, employers are liable to pay the Australian Tax Office (ATO) a tax, known as an SG charge.

There are many factors that make up an SG charge – including additional charges depending on the circumstances, which could be in the tens of thousands of dollars. But importantly, any charges cannot be considered as a tax deduction.

Even if an employer is just one day late in making the SG contribution, they will be liable to the charge.

To address this concern, the Federal Government has proposed a 12-month SG amnesty that hopes to incentivise businesses to come forward with any superannuation shortcomings.

If the proposed law does come into effect, the amnesty would be enacted retrospectively from 24 May 2018 to 23 May 2019.

It is not known when – or if – the SG amnesty will be passed. Unsurprisingly, business groups have welcomed the prospect but the Australian Trade Union and Federal Labor strongly oppose it.

Thankfully, our Superannuation and Tax Services teams are well across any changes in the Australian landscape and can help you stay across any updates.

Feel free to make an appointment with AMD to discuss your superannuation and tax needs.