Back in May 2018, the Federal government introduced the Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2018, which sought to allow employers a one-time only, 12 month amnesty with respect to past underpayments of employee superannuation.
This proposed amnesty would allow all current and past employers the ability to claim an amnesty through which they could pay all outstanding superannuation to employees, including interest.
The amnesty would both relieve the employer of any penalties for late payment which they might otherwise face, and allow the payments to be tax deductible (as opposed to payments of the Superannuation Guarantee Charge, which are not).
This legislation was initially proposed within the context of estimates that nearly $3bn dollars in superannuation entitlements go unpaid each year. If legislated as proposed, the amnesty would run for 12 months from 24 May 2018, and relate to any underpayments having taken place in the period spanning 1 July 1992 through to 31 March 2018.
The ALP has strongly opposed the legislation on the basis that employers responsible for underpayments should not be given the opportunity to get away with such underpayments without facing a penalty. The government's argument is based on the suggestion that it is better to extract payments from defaulting employers for the benefit of the employees who have been underpaid, than it is to take a strict approach to enforcement, which might in turn deter employers from rectifying past defaults. It remains to be seen whether the legislation will pass the Senate.
Unfortunately, in my experience, the payment of superannuation obligations can often lapse during periods where employers find themselves facing cash flow problems, and in certain situations, particularly individual contractors, misunderstandings surrounding the obligations of the principal are common.
It is important for readers to note that until the legislation relating to the Superannuation Guarantee Amnesty does pass parliament (or rather, if it does), the full penalty regime will continue to apply. With this in mind, employers or contracting principals who are aware of past defaults should tread carefully, and seek legal advice where necessary.
Coleman Greig will look to keep
readers up to date with regard to the progress of the Treasury Laws
Amendment (2018 Superannuation Measures No. 1) Bill
2018.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.