An Approach to Super Compliance in 2020

Written by: The Institute of Certified Bookkeepers

Background Context

Single Touch Payroll reporting means that the ATO is now able to see: Which employers are not reporting Which employers are not accruing Super, or not accruing correctly Which employers are not paying Super (the super funds report all payments received)
The ATO as regulator of Superannuation Guarantee now has the means to be proactive in chasing employer compliance. Government has a priority – the adherence to Superannuation requirements.
We might get an amnesty period for getting Super Guarantee up to date. The ATO discretion to reduce penalties will be diminished thereafter.
An employer must lodge the SGC forms if super is late or missing. Late payment does not stop the penalties accruing. The paperwork must be done.

The proposed Superannuation Guarantee Amnesty is not yet law!

The Bill is currently being considered by Parliament for the second time. It is before the Senate and likely to be considered in February 2020 (politics dependant).

If the Amnesty (as proposed in the current draft of the Bill) becomes law, employers will have 6 months to:

Calculate any outstanding Superannuation Guarantee (SG) amounts
Check if any amounts were paid late but a SG Charge (SGC) form was not lodged
Lodge a SGC form for any historic issues Obtain the PRN from the ATO
Pay the outstanding amount or enter a payment plan

The employer must then comply with the payment plan and also meet future obligations.
Note: The employer will be able to treat the late payments as tax deductible, and penalties will not apply.

When the proposed Amnesty expires:

Any further previously undisclosed late or omitted payments will not be tax deductible
The SG shortfall will need to be paid
Interest of 10% per annum to be calculated and paid
SGC Part 7 penalties will be applied in full at 100% of the shortfall amount
Administration penalty of $20 per employee per quarter
Government have advised the ATO that they will need to increase their level of compliance activity; i.e. chase the non-compliant employers

The ATO says not to wait for the Amnesty law

We understand some employers may be ‘holding off’ lodging an SGC statement in anticipation of the amnesty,” Mr O’Halloran (ATO Deputy Commissioner – Employer Obligations) said.

“We advise them not to do this as the law requires them to lodge the SGC; if they hold off and they’re notified we’re examining their affairs, they won’t be eligible for the amnesty; and if they lodge now and the law is passed, in its current form it is retrospective.”

Meaning that if employers lodge SGC forms as they are required to and:
1. The amnesty becomes law, then the ATO will go back and remove the penalties; or
2. If the amnesty doesn’t become law, then the penalties will be applied anyway, and the ATO will be applying all compliance elements of the law.

Action Required

If There is No Amnesty

Law that already exists imposes:

SG Charge will apply; i.e. pay the SG, but as a charge to the ATO
Interest of 10% per annum starting from the beginning of the relevant quarter
$20 per employee per quarter administration fee
SG Charge remains non tax deductible
Penalties (Part 7) up to 200% of the SG Charge amount if an SGC form is not lodged

An employer needs to either be or become compliant by lodging SGC forms for any omission or late payments from the past.

Prepare and lodge the current SGC forms.

If There is an Amnesty

Prepare and lodge the SG Amnesty forms, which will not charge the admin fees and penalties.
Note: Interest still applies.

The Compliant Employer

The circumstances that indicate an employer is perfectly compliant with Superannuation Guarantee requirements:
1. They calculate the Superannuation Guarantee correctly.
2. They pay the SG amounts through approved SuperStream Gateways.
3. The payment is made in time so that the funds are received into the employees’ accounts of the respective Super funds by the 28th of the month after each quarter – noting payment may need to be made considerably earlier, and also some industrial arrangements require payment more regularly.
4. Super accrual is shown on the employee payslip (Fair Work obligation).
5. Payments of pay to employees are reported through Single Touch Payroll to the ATO, which includes the required SG accrued amount or the OTE amounts.

If Super is Paid Late

You can make late payment to the employee’s super fund, however you must still lodge the applicable SGC forms.
The full SGC calculation – including interest – must be calculated, and the amount paid late to the super fund can offset the shortfall amounts.

How to Lodge the Forms

Through the Business portal – Use the SGC statement and calculator tool. Agents can upload the spreadsheet version of the SG Statement into Online Services.
The ATO advises that a business can authorise an agent to use the business portal to lodge the SGC statement through the online system. Refer to the ATO website on how to lodge, and look under the heading “Use Access Manager to provide access to a third party”.

How to Pay the SGC

You must obtain the SGC payment PRN from the ATO.

This number is not available until after the SGC forms have been submitted.

The ATO advises to phone 1800 815 886 between 8.00am – 6.00pm, Monday to Friday, including where you need to request a new PRN.

Employee Contributions Cap

There is a limit ($25,000) to how much super can be paid for an employee to be taxed at the concessional rate of 15% – See ATO – Concessional contributions. The excess contribution will be taxed at marginal rates.

If an employer is making late payments of super to the super funds or ATO for previous periods, the cap may be inadvertently exceeded. The employee can apply for the excess payment to be allocated to prior years.

ATO Application Form – excess contributions determination

Proposed Amnesty