“In those prior years, the client had fully utilised their concessional caps making contributions themselves or from other employers, and the amounts that they’re going to receive this year will cause them to exceed their concessional cap,” he said.

“When super guarantee is not paid on time, there [are] three components that get paid. There’s the super guarantee percentage as a percentage of salary and wages, then there is interest added on the top of that, and those two combined get paid to the member’s account as a contribution. There’s also a $20 admin fee per quarter per person, which racks up very quickly if you’ve got a large organisation.”

Johnston said SG shortfall payments count towards the member’s cap in the year they’re received, and if there is a dispute over the time frame of these payments, members can apply for the ATO’s discretion.

“To apply to the ATO for discretion, there is a form on their website. What the ATO is going to do is ask you if you think these contributions should be allocated to a different financial year, and answer that question of why when telling them,” he said.

“They’re looking for things that are outside of the trustees’ control, effectively, they weren’t at fault. If you know you’re getting these payments, you can send that in advance or at least in advance of getting the excess notice.”

He added that it is also important to note that if the member has maxed out their concessional contributions for the year already, they will still have a problem in terms of allocating the funds.

“You can go back and inform the ATO the contributions related to something that happened 15 years ago, but if you’ve maxed out your concessional contributions cap in that year anyway, you’re probably still going to have a problem,” he said.

“There are potentially other avenues for objecting to the tax, but there’s not really a great option if you’ve used that cap space before, but certainly apply to the commissioner to reallocate those contributions to a different financial year.“

Lyn Formica, head of education and content for Heffron, said it is also possible to ask for them to be disregarded.

“You could tell the ATO [of] the contributions related to the periods 15 years ago and the member did not know this shortfall was going to come in and couldn’t make an allowance for it which has negatively impacted them and ask the commissioner to disregard it rather than reallocating it to the year that it did appropriately belong to,” she said.

“It’s certainly worth a try. I don’t readily suggest to people that they apply for discretion to disregard or reallocate contributions, though when we’re talking about SG shortfall, particularly with an unrelated employer, it’s shaky grounds if you’ve got a related party employer, because you really should have known what was was going on.”