With the Federal Election earlier this year, many proposed laws or budget concepts that did not get passed prior to the election were scrapped. One such proposal related to a superannuation amnesty for small business. This proposal has once again been introduced into Parliament and if passed is something employers should strongly consider taking up.
With the introduction of single touch payroll, the ATO is receiving more accurate and timely payroll data than ever before. This includes the ability to identify and follow up employers who are not paying their employee’s super commitments. The super regulations can be especially harsh and onerous for those employers who pay their super late and this is the one tax liability employers should prioritise in their cash flow.
The new amnesty proposed gives employers the ability to report to the ATO on any unpaid super up to 1 July 2018. The amnesty will apply for a period of 6 months after the Bill is passed and only applies to businesses who voluntarily disclose to the ATO (i.e. go to the ATO before the ATO investigates them). The benefits of disclosing under the amnesty are the late super payments are tax deductible, the $10 per employee per quarter administration fee is waived and lower penalties will be applied.
This should be compared to the situation if a business is discovered to have not paid their super commitments after the amnesty ends. In this case the administration fee will apply, the super payments will not be tax deductible and the ATO will be forced to apply a penalty of at least 100% of the super outstanding but this be as high as 200%.
If you need help understanding your business’ super commitments, please do not hesitate to contact us.