Reduce SG amnesty penalty from 200% to nil: The Tax Institute
The Tax Institute has used its Budget submission to call on the Government to reduce the penalty rate for historical superannuation guarantee (SG) non-compliance from 200% to nil after the current amnesty deadline.
The SG amnesty is due to expire today and the institute has called on the Government to extend the amnesty to 7 March, 2021.
It said disruptions caused by the COVID-19 pandemic had affected a large number of employers, many of whom might wish to make disclosures under the amnesty but had redirected their resources to other priorities such as keeping their businesses afloat through the pandemic.
“Further, financial strain and cash flow issues caused by such disruptions mean that businesses may not have immediately available funds to pay superannuation guarantee shortfalls, and the Victorian Stage 4 restrictions are preventing access to vital payroll records and documents which are necessary to determine the amount of any SG shortfalls,” it said.
The institute noted that once the amnesty expired, the repercussions for failing to come forward could be severe.
“The current rules discourage employers who are trying to do the right thing from admitting honest mistakes. Even minor errors, such as paying superannuation just one day late, are met with disproportionately onerous and draconian penalties,” the submission said.
“The severity of the Part 7 penalty alone has the capacity to drive businesses to insolvency, and directors’ personal liability is a further risk.
“The Tax Institute again calls on the Government to grant the Commissioner the discretion to reduce the Part 7 penalty imposed at the rate of 200% to nil after the current amnesty deadline. The current law restricts the Commissioner from remitting penalties below 100% of the amount of the SG charge payable for employers who fail to disclose shortfalls during the amnesty period.”
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