Benefits from SG Amnesty

Employer benefits from Superannuation Guarantee (SG) Amnesty

Where an employer qualifies for the SG amnesty in relation to their SG shortfall for a particular quarter and has not ceased to qualify for the amnesty (refer to the third article on this topic), the following benefits will apply to the employer:

No administration component is included in the calculation of the employer’s SG shortfall amount. Refer to new S.32(2) and (3) of the SGAA.

The administration component (i.e., $20 per employee, per quarter) will be excluded from the calculation of an employer’s SG shortfall to the extent the shortfall has only been identified because of disclosure under the SG amnesty. That is, if an employer already had an administrative component in respect of an employee because of a previous SGC assessment (e.g., one that occurred prior to SG amnesty), the amnesty does not affect the previous administration component.

Part 7 penalties do not apply (i.e., for failing to lodge an SGC statement by its due date) in respect of an SG shortfall that qualifies for the SG amnesty. Refer to new S.60 of the SGAA.

The protection from Part 7 penalties only applies in respect of further penalties that would otherwise arise for disclosures made under the SG amnesty (i.e., Part 7 penalties applied to SG shortfalls disclosed prior to the SG amnesty will not be reduced).

As was the case prior to the SG amnesty, the Commissioner continues to have the power to remit (wholly or partly) Part 7 penalties that do not qualify for the amnesty. Note, however, that the Commissioner’s ability to remit Part 7 penalties may be restricted concerning employers who failed to disclose a historical SG shortfall during the amnesty period.

Note also that the SG amnesty does not apply to reduce the general administrative penalty that is payable, under Division 284 of Schedule 1 to the TAA 1953, for failing to lodge an SGC statement by its due date (which may be up to 75% of the SG shortfall amount).

Employers will be able to claim tax deductions for payments made in relation to SGC charged on SG shortfalls disclosed under SG amnesty.

Specifically, payments of the SGC or late contributions made directly to an employee’s superannuation fund (and offset against the employer’s SGC liability) are deductible for income tax purposes, provided the payment was:

made in relation to an SG shortfall disclosed under the SG amnesty; and
paid during the amnesty period (i.e., during the period from 24 May 2018 until 11:59 PM on 7 September 2020).

Refer to new S.26-95(2) and new S.290-95(2) of the ITAA 1997.

Note that payments of the SGC (i.e., made to the ATO) under the SG amnesty, and during the amnesty period, are deductible even if the Commissioner applies the payment to clear an older SGC debt. Refer to new S.26-95(2)(b) of the ITAA 1997.

Employers may deduct payments made in relation to any SGC imposed on an SG shortfall disclosed under the SG amnesty up to the amount of the charge. This ensures that employers that have negotiated a payment arrangement with the Commissioner are able to claim payments for part payments made during the amnesty period up to the value of the SGC imposed on the SG shortfall disclosed under the SG amnesty.

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