Are you an employer who is being kept up at night worried about the tax office catching up with you over unpaid super owed to your employees or contractors? Or perhaps you are an artist who believes they were entitled to super from an employee but were never paid? If so, then you should know about the Australian Tax Office’s (ATO’s) upcoming 7 September 2020 deadline for their superannuation guarantee amnesty.
Superannuation Guarantee Amnesty
On 6 March 2020 the government introduced a superannuation guarantee amnesty. The amnesty allows employers to disclose and pay previously unpaid super, that they owe their employees, for quarter(s) starting from 1 July 1992 to 31 March 2018. Importantly, employers participating in the amnesty need to apply by 7 September 2020.
Eligible disclosures will not incur the administration component ($20 per employee per quarter) or Part 7 penalty.
In addition, and as an incentive for businesses, payments of SGC made to the ATO after 24 May 2018 and before 11:59 PM 7 September 2020 will be tax deductible.
I am owed super, how will this help me?
Have you been tossing up when and how to pursue unpaid super? This initiative by the ATO presents an opportune time for you to raise this with the business. If you are an artist who thinks they may be owed super, you can contact Arts Law for advice on this and how best to raise it with the business.
Help, I’m a business which owes super!
Generally, if you want to participate in the amnesty, the law requires you to apply by 7 September 2020.
However, the government can work with you to establish a payment plan that is flexible to help you to continue making payments. These arrangements include:
- flexible payment terms and amounts
- the ability to extend the payment plan to beyond 7 September 2020. However, only payments made by 7 September 2020 will be deductible.
If you are still unable to maintain payments, the government will need to disqualify you from the amnesty and remove the amnesty benefits for any unpaid quarters.
What is Superannuation?
Like other working people, artists need superannuation in order to have some retirement income in their old age.
Who needs to pay?
Generally, if an employer pays an employee or eligible independent contractor $450 or more before tax in a calendar month, the employer has to pay super on top of their wages. Importantly, this entitlement is often also owed to independent contractors.
The minimum amount must pay is called the super guarantee (SG):
- the SG is currently 9.5% of an employee’s ordinary time earnings
- SG must be paid at least four times a year, by the quarterly due dates
- Super payments must go to a complying super fund – most employees can choose their own fund
- if SG is not paid on time, there will be a super guarantee charge, which is not tax deductible
- Super needs to be paid and reported electronically to ensure it meets SuperStream requirements.