Part 7 penalty waived amid SG amnesty hold
Accountants Daily have reported that the Tax Office will waive the Part 7 penalties for those who voluntarily report historical underpayment of superannuation guarantee (SG), despite the proposed amnesty not yet being law.
In fact, the Parliament have 2 sitting days left before a federal election is to be called. The initial announcement around the SG amnesty was made on 24 May 2018 and the measure was intended to occur between 24 May 2018 through to 23 May 2019 giving employers a rather decent opportunity to catch up on their historical SG non-compliance without incurring penalties. There is currently 11 weeks until that period ends.
While penalties will not be incurred, the employers will still have to pay the SG they owe to their employee/s, the interest amount incurred from accrual date, and the $20 administration component per employee per quarter. Unfortunately, while the amnesty is not in place, the SG is not tax deductible but still required to be paid.
However, should the amnesty be passed, the proposal was to include a waiver of the administration fees, Part 7 penalty and allow all catch-up payments made during the 12-month period to become tax deductible.
Basically, while there is no guarantee that the amnesty will be passed, it is strongly preferred that all employers pay the SG owing. If it isn’t paid and the business ends up being audited, it is likely that the full penalties will be applied which is much worse for cash flow and not tax deductible.