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A tax lawyer has urged employers to review and declare any unpaid superannuation to contractors under the proposed superannuation guarantee amnesty despite legislation yet to be enacted.
‘Numerous examples’: Tax lawyer spots amnesty take up
25 October 2018
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7 minute read
Macpherson Kelley principal lawyer and head of the tax team Prath Balasubramaniam said he often sees clients tripping up by failing to pay independent contractors their superannuation, calling it a “sleeper issue” for businesses.
“It’s a common mistake I see among clients,” said Mr Balasubramaniam.
“Employers think that because a worker has an ABN or claims to be an independent contractor they don’t have to pay super. But the obligation to pay super is the law and it is 100 per cent an employer’s burden – it’s non-negotiable.”
Earlier this year, the government announced a 12-month amnesty period for the historical underpayment of the superannuation guarantee, in anticipation of the full implementation of STP.
Under the proposal, an employer that has an SG shortfall amount in any period from 1 July 1992 up to 31 March 2018 has the ability to claim tax deductions in respect of SG charge payments made and contributions that offset the SG charge to the extent that the charge relates to the SG shortfall. In addition, the administrative component to the SG charge will not apply.
The amnesty will be available from 24 May 2018 to 23 May 2019, but legislation has yet to be passed, with the ATO confirming that the benefits are not yet in effect.
However, Mr Balasubramaniam has been advising clients to come forward and declare any unpaid super, noting examples of the ATO granting the amnesty.
“We are advising clients to act on the basis that the amnesty is available although the law has not been enacted,” said Mr Balasubramaniam.
“We have numerous examples of the ATO granting the amnesty. If the new law is not enacted, it is our view that the ATO will not reverse the position they have taken where they have granted the amnesty. However, they may cease granting the amnesty going forward.”
The Institute of Public Accountants (IPA) general manager of technical policy, Tony Greco earlier told Accountants Daily that accountants should consider advising clients to make a voluntary disclosure despite the hold up.
“At the end of the day, if you have an SG obligation and you get caught up in audit activity, you’re going to face the full penalty regime so that is the issue is if you wait,” said Mr Greco.
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- It is concerning that the Commissioner is acting outside the law, i.e. illegally, in granting an amnesty now when there is no law empowering him do so yet. It leaves open the possibility that he is not treating all taxpayers equally. Nothing is more corrosive than when public servants give special treatment to select taxpayers. Public servants should be obliged to comply with the law just like everyboby else.0
- Under current laws the Commissioner has no discretion with late super. So if the legislation does not pass, then the amnesty terms & conditions are null and void! ATO ID 2002/309 "No, the Commissioner cannot waive any components of the SGC as there is no discretion available in the Superannuation Guarantee (Administration) Act 1992 (SGAA)." Having said that, the super will remain subject to SCG costs until such time as it has been assessed by the ATO. So maybe sooner is better than later? But the amnesty would be MOST welcome.0
