The Superannuation Guarantee (SG) Amnesty is a one-off opportunity to correct past unpaid SG amounts. Employers have a few months window, until 7 September 2020, to disclose, lodge and pay unpaid SG amounts for their employees. Employers can claim deductions and not incur administration charges or penalties during this amnesty.
Employers’ obligations under the SG rules
The SG rules effectively set a minimum level of superannuation support required by employers with respect to their employees. Broadly, this support requires employers to do the following:
- Pay the correct amount of superannuation contributions – for quarters beginning prior to 1 January 2020, employers calculated the minimum level of superannuation contributions as a percentage (9.5% in the 2020 income year) of an employee’s ‘ordinary time earnings’ (OTE) on a quarterly basis. An employee’s OTE broadly means the amount the employee earns for their ordinary hours of work.
An employee’s ‘ordinary hours of work’ are generally the hours specified as their ordinary hours of work under the relevant award or agreement, or a combination of such documents governing the employee’s conditions of employment (if any). Earnings for hours worked in excess of these ordinary hours (e.g., overtime payments) are not included in the employee’s OTE. Refer to Superannuation Guarantee Ruling (SGR) 2009/2.
Note that the prescribed minimum of superannuation support is currently capped to a ‘maximum contribution base’ of $55,207 per quarter in the 2020 income year. That is, where an employee has an OTE base in excess of $55,270 for the March 2020 or June 2020 quarters (or OTE in excess of $55,270 for the September 2019 or December 2019 quarters), their employer is not required to pay SG on the excess amount. Refer to S.15 of the Superannuation Guarantee (Administration) Act 1992 (SGAA).
- Pay the quarterly superannuation contributions by the quarterly due date – the due date for payment of a superannuation contribution to a complying superannuation fund is the 28th day following the end of the relevant quarter. For example, the due date for superannuation contributions payable for the March 2020 quarter is 28 April 2020. Where the due date falls on a Saturday, Sunday or public holiday, employers are allowed to make payment on the next working day.
- Meet their choice of superannuation fund obligations – employers must generally provide employees with a standard choice form (available on the ATO’s website – NAT 13080), ensure superannuation payments are made to funds chosen by employees and not charge a fee for implementing an employee’s choice of fund.
Recent amendments expand SG contributions base
For quarters beginning on or after 1 January 2020, and employer’s SG liability will be determined using the employee’s ‘OTE base’ (rather than the employee’s OTE as was previously the case). Broadly, an employee’s OTE base for a quarter is the sum of:
- the OTE of the employee for the quarter; and
- any salary sacrificed superannuation contributions for the employee for the quarter that would have been OTE, but for the salary sacrifice arrangement.
Further, also with effect from 1 January 2020, an employee’s salary sacrificed superannuation contributions cannot be used to reduce their employer’s SG liability.
- Should you have any queries, please contact Tax Ideas Accountants & Advisers on +61 2 83181545
- Alternatively, you can book an appointment in our live calendar.
- Superannuation Guarantee Amnesty (2) – Consequences for Not Meeting SG obligations
- Superannuation Guarantee Amnesty (3) – Eligibility for The SG Amnesty
- Superannuation Guarantee Amnesty (4) – Benefits from The SG Amnesty
- Superannuation Guarantee Amnesty (5) – Increased Minimum Penalty for Employers Ignore the SG amnesty
- Superannuation Guarantee Amnesty (6) – Contributions Made Under the SG Amnesty (1)
- Superannuation Guarantee Amnesty (7) – Contributions Made Under the SG Amnesty (2)