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The ATO have confirmed it will waive the Part 7 penalties for clients who voluntarily disclose historical underpayment of the superannuation guarantee, despite the proposed amnesty not yet law.
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ATO waives Part 7 penalty amid SG amnesty hold up
07 March 2019
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On 24 May last year, the government announced a superannuation guarantee (SG) amnesty which would give employers an opportunity to rectify past SG non-compliance without penalty.
The SG amnesty measure was originally intended to apply from 24 May 2018 till 23 May 2019, but has yet to be legislated, with just two sitting days left before a federal election is called.
The Tax Office has now confirmed it has waived the Part 7 penalty in full for those who have made a voluntary disclosure.
Employers will still have to pay the SG they owe to their employee, the interest amount, and the $20 administration component per employee per quarter.
“Consistent with our existing approaches in other instances where people come forward voluntarily, when we receive these SG notifications, the fact that they have come forward to the ATO is a strong consideration in the level of discretional penalty applied,” an ATO spokesperson told Accountants Daily.
“In relation to SG, the ATO only has the discretion to remit the Part 7 penalty. With regard to those taxpayers who made a voluntary disclosure in anticipation of the proposed amnesty, we will remit the Part 7 penalty in full.”
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The benefits of the proposed amnesty was set to include a waiver of the administration component, Part 7 penalty, and allowing all catch-up payments during the 12-month amnesty period to become tax-deductible.
Accountants Daily had earlier reported that several accounting firms had noticed examples of the ATO granting the amnesty, despite the agency clarifying that it would be applying the existing law before the law was enacted.
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 if you wait,” said Mr Greco.
Since 1 July 2018, the ATO have completed 17,917 compliance cases around SG payments, raising raising liabilities of $451 million.
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