With the transition to Single Touch Payroll almost complete for all employers within Australia, the ATO now has considerably more information to identify superannuation guarantee non-compliance in real time. Employers that do not make sufficient quarterly superannuation contributions for each employee by the due date will be liable to the superannuation guarantee charge (SGC), a penalty which is not deductible to the employer.
Generally, SGC equals the superannuation guarantee shortfall, which is made up of the total of the individual super guarantee shortfalls for all employees for the quarter, an interest component of 10% per annum and an administration component of $20 per employee per quarter. If an employer has a shortfall, they are required to lodge a superannuation guarantee (SG) statement by the 28th day of the second month following the end of the quarter.
Where the employer lodges their SG statement late or fails to provide information relevant to assessing liability to SGC for the quarter, they may be subject to an additional penalty of 200% of the amount of SGC. This additional penalty is automatically imposed on the employer by superannuation law.
While the ATO does not have discretion to remit or waive the interest and administration components of the SGC, it does have discretion to remit some of the additional 200% penalty provided the employer satisfy certain conditions. According to information released by the ATO, penalty relief will only be applied on limited circumstances where it is considered that education is a more effective option to positively influence behaviour (ie an employer with SG knowledge gaps that has led to non-compliance).
In addition to the above, an employer is only eligible for penalty relief where they have a turnover of less than $10m and they:
- do not have a history of lodging SG statements late;
- have lodged no more than 4 SG statements after the lodgement due date in the present case;
- have no previous SG audits where they were found to have not met their SG obligations; and
- have not previously been provided with penalty relief.
The percentage of penalty remission depends entirely on an employer's degree of compliance. For example, where there is severe/repeated disengagement or where the ATO is of an opinion that the employer has engaged in a phoenix arrangement, there will be no remission of additional penalty. On the other side of the spectrum, where an employer lodges an SG statement after the due date but before any ATO contact, the additional penalty may be reduced to 20% of SGC.
The ATO may also consider other relevant facts of circumstances to further increase penalty remission, including natural disasters, incorrect advice by the ATO, key system outage, ill health of key employees or the lack of business experience of principals.