Let's talk about Super Guarantee (SG)

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Recently The Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019 was passed in parliament (SUPER!) and it has been sent to the Governor General for his tick and flick. Good news if you’re an employer who hasn’t kept their superannuation up to date. Now is the time for you to take advantage of a one-off amnesty to self-correct historical Super Guarantee (SG) non-compliance.

What does this mean?

To give some context and properly understand the changes, let’s talk about the old then the new..

The Old

An employer’s responsibility is to make the minimum SG contribution of 9.5% (effective 1 July 2014) for each employee (increasing to 10% in 2022). Under the old rules, if an employer didn’t comply, they would be hit with an SG charge equal to the ‘SG Shortfall’.

This includes: 

  • The amount of super an employer has fallen short of contributing to the minimum percentage required by the due date for a particular employee

  • Interest charged on the above component - from when it was unpaid to when the SG charge is now payable

  • An administrative fee of $20 for each employee that you have not made the minimum contributions for

From a tax perspective, the above charges were also non-deductible and could not be used to offset future SG charges.

The New

The new SG Bill will give a one-off amnesty to employers with a history of non-compliance for ALL SG shortfall before 31 March 2018.

This means that employers who correct past non-compliance will now be able to claim tax deductions for payments of SG charges or contributions made during the amnesty period to offset SG charges. In addition to this, they are also reducing all other penalties and administrative fees to nil.

In order to be eligible for the amnesty, an employer must disclose to the Commissioner all information related to an SG shortfall within 6 months from that date it receives its royal ascent (which hasn’t happened yet, so there is still time!).

Summary

This isn’t a get out of jail free card. Employers will still have to repay all super that is owing to their employees (including the interest owed on the SG charge), and employers who do not take advantage of the 6 month period may face significantly higher consequences if they fail to correct past shortfalls.

So, if you are an employer who has not met the minimum requirements, you need to take advantage on what the Treasury Laws Amendment Bill is offering!

And if you are an employer or future employer, let this serve as a great reminder to keep on track of your superannuation obligations.

Get in touch with m+h Private

Still wondering what super guarantee means? Or what your Superannuation obligations as an employer are? To ensure you are on top of everything Super, get in touch with m+h Private Superannuation specialists in Brisbane on + 61 3036 7174.

James Hoeft