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Employment and Migration Blog

Super Guarantee amnesty for employers - Bill re-introduced

Posted by Stephen Booth on 25 Nov 2019

The Federal Government has announced another attempt at offering an amnesty to employers who have not complied with superannuation guarantee legislation. 

The first try at this was announced in May 2018, with a 12-month window (from the date of announcement) to self-report for non-complying businesses. The only problem was that the Government could not get the legislation through the Senate, and it lapsed in April 2019 when the election was called. 

Nevertheless, a number of employers did take up the apparent opportunity to self-report without penalty, on the basis of the proposal as announced, but which never became law, and were therefore exposed to the penalties arising from the original non-compliance. So, the ATO had to remit penalties to avoid the employers from suffering serious consequences from having relied on the Government’s announcement.

The new amnesty proposal, announced (and again introduced into Parliament) on 18 September 2019, stated it would operate from 24 May 2018 to a date 6 months after the legislation comes into law, and would validate past disclosures and allow another 6 months for employers with super skeletons in the closet (from before 31 March 2018) to come clean. 

The new legislation comes with an additional incentive to self-report: an employer with past super defaults, who does not take advantage of the new amnesty, will face a 200% penalty for the underpayments, which the ATO cannot remit to an amount below a 100% penalty.

This additional feature may be intended to address the issue which caused the Opposition and some crossbenchers to object to the amnesty in 2018 – that the amnesty allowed errant employers to get off scot-free. It remains to be seen whether the tougher penalties post-amnesty will be enough to get the amnesty through this time. 

The Government’s argument is that the amnesty will incentivise employers to bring to light historic underpayments, which will otherwise not surface unless uncovered case-by-case by the ATO or reported by affected employees. So, the employees who have been gypped will be better off, and more of them will probably benefit than under the ordinary enforcement processes.

The Opposition’s argument is that offenders should not be rewarded for bad behaviour, which is true enough at a time of heightened consciousness of wage theft, and highlights the moral hazard in the amnesty scheme, but will not help build the underpaid super accounts for the benefit of the employees.

It is expected that the single touch payroll system will give the ATO much better information for identifying shortfalls promptly, so future non-payers will have smaller scope to hide, which may expose a lot more historical underpayment.

Putting aside deliberate failures to pay super (which commonly occur in cash-strapped businesses, as well as with employers willing to game the system), confusion about superannuation liabilities can result in underpayments. 

Common confusions include:

  • which payments are, and which are not, “ordinary time earnings”, and hence give rise to the liability; and,
  • whether contractors, or other non-typical workers, are “deemed employees” because they essentially supply labour – the liability does not apply only to employees in the traditional sense.

If you need assistance to make sure you are applying the rules correctly, please do not hesitate to contact a member of Coleman Greig’s Employment Law team.

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