18 March 2020

On 6 March 2020, the superannuation guarantee amnesty Bill finally became law.

Employers have until 7 September 2020 to take advantage of the amnesty and disclose to the ATO any superannuation guarantee shortfalls for the March 2018 and earlier quarters.

If employers do not take advantage of the amnesty in relation to historical shortfalls, they will be subject to a penalty of up to 200% of the shortfall. The ATO will not have the power to remit that penalty below 100% for historical quarters.

Common mistakes for underpaying compulsory superannuation

The most common mistakes we see involve businesses that have inadvertently underpaid compulsory superannuation. For example, by:

  • miscalculating ‘ordinary time earnings’ – especially in relation to ‘overtime’ amounts
  • treating individuals as contractors, when they are actually employees
  • missing individuals, who are not employees, but who are deemed by the legislation to be employees for the purpose of the superannuation guarantee charge.

We discussed the superannuation guarantee amnesty including each of these common mistakes in our previous article. If you have any questions or concerns about paying the right amount of compulsory superannuation, please get in contact with us as soon as possible so we can help you manage your response to the amnesty.

BAS agents may soon have obligations in relation to the amnesty

The Tax Practitioners Board (TPB) has also announced that it is reviewing whether it needs to expand the definition of ‘BAS services’ in light of the superannuation amnesty.

Currently BAS services include service under:

  • the Superannuation Guarantee (Administration) Act 1992 to the extent that the service relates to a payroll function or payments to contractors
  • the Superannuation Guarantee Charge Act 1992
  • Part 3B of the Superannuation Industry (Supervision) Act 1993
  • Part 5-30 in Schedule 1 to the Taxation Administration Act 1953
  • sections 202CD and 202CF of the Income Tax Assessment Act 1936
  • section 9 of the A New Tax System (Australian Business Number) Act 1999.

The TPB is considering expanding these services to include additional services in respect of superannuation guarantee contributions – e.g. preparing and lodging superannuation guarantee statements and making payments under the amnesty.

If BAS services include these additional services in respect of superannuation guarantee contributions, there could be severe consequences for BAS agents who do not competently provide these services to clients – it could be a breach of the code of conduct and Tax Agents Services Act 2009 (TASA) and the TPB may impose disciplinary sanctions.

BAS agents and advisers should be aware of and advise clients of the risks. This is particularly where there is a risk that a client has inadvertently and mistakenly underpaid compulsory superannuation. Businesses will need to consider their options before the amnesty period expires on 7 September 2020.

The TPB has said that it will not commence any compliance action under the TASA against BAS agents in respect of services that will be reviewed until after the review has been completed.

Please contact a member of our team if you would like to discuss.

 

This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please let us know.