The SG amnesty window opened on 6 March and will close on 7 September.
But according to a blog by CGW Lawyers, the main risk with the SG amnesty is making a disclosure but not being able to pay the superannuation guarantee charge (SGC), meaning the benefits of the amnesty will not apply.
With many businesses dealing with the negative impacts from the coronavirus, the law firm said this creates a potential tension between:
- Employers taking advantage of the SG amnesty and making a disclosure of any historical shortfalls.
- The risk that employers who do make disclosure may not be able to pay the resulting SGC.
CGW Lawyers highlighted a range of incentives for employers to capitalise on the SG amnesty (table below). However, those incentives will not apply if an employer is not able to pay the SGC.
Advantages of the SG amnesty
|
Factor |
Amnesty conditions |
Normal conditions |
|
SGC shortfall |
Deductible* |
Not deductible |
|
Contributions offset against SG charge |
Deductible* |
Not deductible |
|
Admin component |
Waived |
$20/per employee/per quarter |
|
Nominal interest |
Still applies |
Still applies |
|
Part 7 penalties |
Waived |
Maximum penalty is 200 per cent of the SGC. The amnesty will result in the commissioner losing the ability to remit the penalty below 100 per cent for historical quarters in all but “exceptional” circumstances. |
|
Payment plan |
Amnesty conditions fail if: |
Subject to the usual ATO debt policies |
Source: Cooper Grace Ward Lawyers
“The ATO has recognised that employers may wish to apply for the SG amnesty, but be concerned about having to pay the liability because their financial circumstances have changed, or may change, because of the coronavirus,” the law firm said.
“Recognising that tension, the ATO has said that it will work with employers to ensure that any payment plan is flexible to help them to continue making payments.”
CGW Lawyers said payment plans may extend beyond 7 September 2020, but any payments made after 7 September 2020 will not be deductible.
Further, it said the ATO doesn’t have the power to change the SG amnesty if employers cannot repay the SGC. However, the law firm noted the ATO’s remarks that:
- Employers will only be disqualified from the SG amnesty for the unpaid quarters.
- It will advise employers which quarters are unpaid and re-apply the administration component of $20 per employee for those quarters
- It will take into account the employer’s circumstances when deciding whether the Part 7 penalties (maximum penalty of 200 per cent of the SGC) should be applied, which may result in the Part 7 penalties being reduced to nil.
