Update on superannuation guarantee amnesty and impact of COVID-19

In brief – The superannuation guarantee amnesty is now in force and the ATO has introduced flexible payment terms for employers adversely affected by COVID-19

The Federal Government recently enacted the Treasury Laws Amendment (Recovering Unpaid Superannuation) Act 2020 (Cth). It introduces a one-off amnesty until 7 September 2020 for employers to disclose and pay unpaid superannuation guarantee charge (SGC) liabilities, without incurring Part 7 penalties or the administration component, for quarters between 1 July 1992 to 31 March 2018. Payments of SGC are also tax deductible. My article Update on voluntary disclosure of unpaid superannuation guarantee liabilities further discusses the amnesty. 

Applications for the amnesty must be lodged and received by the ATO by 7 September 2020. The ATO's website contains further information about applying for the amnesty, including the approved form. Employers are encouraged to review superannuation compliance for all periods for which records are available and should consider applying for the amnesty as soon as possible.

A condition for the amnesty is that employers must pay the SGC or enter into and comply with a payment plan. The ATO has recently announced that it will work with employers who are having, or may have, difficulty paying SGC under the amnesty due to the impacts of COVID-19. The following arrangements are available:

• flexible payment terms and amounts which are adjusted dependant on the employer’s circumstances, and

• extension of the payment plan beyond 7 September 2020. However, only payments made by 7 September 2020 will be tax deductible 

If an employer fails to comply with their obligations under the payment plan they will be disqualified from the amnesty and will not receive the benefits under the amnesty. However, the ATO has stated that: 

• the disqualification will only apply to any unpaid quarters

• it will advise which quarters are unpaid – for these quarters it will re-apply the administration component of $20 per employee included in the disqualified quarter, and

• it will consider the employer’s circumstances when deciding whether Part 7 penalties should be applied to their disclosure – a review of their circumstances may result in penalties being reduced to nil

It is important that employers consider their current circumstances and how likely they will be able to make payments to avoid surrendering the benefits of the amnesty. If necessary, a payment plan should be entered into with the ATO.

The ATO has also recognised that some employers will be eligible for refunds as a result of the amnesty. The ATO has stated it will process amendments to returns and payment of refunds as soon as possible.