On 24 May 2018, the government first introduced a 12-month superannuation guarantee amnesty. The relevant Bill failed to pass the Senate and then lapsed when the federal election was called on 11 April 2019.
On 18 September 2019, the Bill was re-introduced, with an amnesty period beginning on 24 May 2018 and ending six months after the legislation receives Royal Assent.
The amnesty is being offered as a last chance for employers. In this version of the amnesty, if a taxpayer doesn’t take advantage of the amnesty in relation to historical shortfalls, they will be subject to a penalty of up to 200%. The Commissioner will lose the power to remit that penalty below 100% for historical quarters.
There are a number of areas where the obligation to pay compulsory superannuation is not clear-cut. The most common mistakes, where well-meaning businesses have inadvertently underpaid compulsory superannuation, are set out below.
Trap One – not understanding ordinary time earnings. There should be no superannuation guarantee charge when compulsory superannuation is paid on time, at the correct rate, on “ordinary time earnings”. “Ordinary time earnings” means the earnings in respect of the ordinary hours of work.
Trap two — contractors who are actually employees. Whether an individual is an employee or independent contractor continues to be the subject of many disputes. The ATO provides a list of factors that they consider when assessing whether an individual is an employee or independent contractor.
Trap three — deemed employees. The superannuation guarantee charge legislation deems certain contractors to be employees. This applies to genuine independent contractors.
Businesses that have identified risks should take steps to remove or reduce those risks in the future.
Source: Wolters Kluwer ATW Issue 39
