The Government has reintroduced draft legislation to create an amnesty for superannuation shortfall disclosures.

The amnesty is designed to encourage employers to correct any underpayments of superannuation and reduces the penalties associated with disclosures.

This will be great news for the huge number of employers who unwittingly short-paid superannuation on annual leave loading, but is not limited to this type of shortfall.

If passed, the legislation, for the amnesty period, will:

  • Remove the $20 per employee per quarter administration charge
  • Make the payment of superannuation guarantee charge income tax-deductible

The amnesty does not remove the need to pay 10% interest on the shortfall amounts, as this is not a penalty as such, but is designed to compensate the employee for lost earnings.

The periods covered by the amnesty are to be from the time the superannuation guarantee was introduced in 1992, until the quarter ending March 2018. The current proposal recommends that disclosures lodged between 24 May 2018 and 6 months after the new legislation receives Royal Assent, will qualify for amnesty.

Whilst the above changes are consistent with the previously proposed amnesty that lapsed before the legislation could be passed, the new legislation includes an additional aspect to further encourage disclosures during this period. A minimum level of penalties will be applied (unable to be remitted) for shortfalls arising, and where the employer did not make a disclosure, during the amnesty period, other than in exceptional circumstances.

What do you need to do?

If you have previously lodged a superannuation guarantee charge disclosure and been charged the administration fee, you should ask the ATO for a refund, noting that this may not be possible until the new law is passed.

If you have superannuation shortfalls to declare, ensure this is done as soon as possible. In our experience, the work to put disclosures together can be more than first anticipated, as there are a number of different aspects to take into account. We suggest acting on this sooner rather than later – regardless of whether the amnesty legislation is enacted.

Grant Thornton is here to help.