SMEs given weeks to pay up under superannuation amnesty or face significant fines

Small and medium business owners that register for the federal government’s superannuation guarantee amnesty are being warned there are only weeks left to either pay outstanding amounts of super or enter payment plans with the tax office.

Businesses that have registered for the amnesty but do not begin paying back the amounts owed in coming weeks will face disqualification from the scheme, and significant penalties of up to 200% as a result.

The super guarantee amnesty was first announced in 2018 and allowed businesses owners that had previously missed compulsory superannuation payments for employees to pay back those amounts without attracting additional penalties. 

The amnesty period went back to 1992 when compulsory superannuation was first introduced, and required businesses to pay a 10% interest charge for each year their super payments were in arrears. 

Employers had until September 7, 2020, to register for the amnesty, and the tax office is now contacting those businesses to inform them the deadline for payments is approaching. 

In updated guidance on its website, published in January, the Australian Taxation Office (ATO) said it has begun phoning and writing to business owners to let them know they must either pay the full amount owed or enter into a payment plan. 

Business owners must do so within 21 days of being contacted by the ATO, otherwise, they will be disqualified from the amnesty and penalties may be applied. 

SmartCompany understands the payment plans available will vary between employers. 

“The government has made it clear that there will be no more extensions,” says CPA Australia’s senior manager of tax policy Elinor Kasapidis. 

Kasapidis tells SmartCompany businesses face both administrative charges and penalties if they applied for the amnesty but did not pay the amounts owed. 

“The worst thing businesses can do is bury their head in the sand,” she says. 

“Businesses who took a revenue hit because of COVID and are now wondering how to come up with the money should set up a payment plan. 

“As long as they meet each ongoing instalment, they’ll continue to keep the benefits of the amnesty.”

According to the Australian Financial Review, about 28,000 employers had disclosed unpaid super amounts under the amnesty as of early-December.

The unpaid amounts totalled about $900 million owed to more than 675,000 employees, with about $700 million already paid back at that time and another $70 million subject to payment plans. 

Further information the amnesty program is available on the ATO website here.