Superannuation amnesty - is there one?
In short – not yet.
You might recall there was a fairly well publicised superannuation amnesty that was meant to run for 12 months from May 2018… trouble is, the legislation didn’t pass and there was no official amnesty. Interestingly though, the Assistant Minister, Jane Hume, says that 7,000 employers have come forward since the amnesty was ‘announced’ – if you can announce something that isn’t actually happening.
Well, like a good zombie, it’s back – but still not imminent. The legislation was reintroduced to Parliament in mid-September and was promptly referred to the Senate Economics Legislation Committee, which is due to provide a report by the 7th of November. So, we will have to wait to know whether the amnesty will get off (or should that be ‘out of’?) the ground this time.
One thing you can be certain of is that the Single Touch Payroll and SuperStream systems are delivering detailed data to the ATO… it will be hard to hide non-compliance in the future, and the penalties will be tougher.
So, the burning question is – are you compliant?
Most organisations do the right thing, and super is one of the easiest and first tests that your auditor will perform each year – testing that super is around 9.5% of your wages.
Superannuation shouldn’t be difficult to manage… it’s been mandatory since 1992 and the rate hasn’t increased since July 2014. Clearing houses and Xero’s auto-super function make it easy to remit super on time – with Xero the authoriser receives a code via SMS that they enter into Xero, which triggers a payment from your nominated bank account to the super funds via a clearing house. Couldn’t be simpler.
But we do come across the odd rogue. There was a childcare centre a few years ago that didn’t have the cash available to make super payments… super was being accrued each pay run and sat in the super liability account on the balance sheet. Trouble was, it was never remitted to the employees’ funds – the childcare centre owed their employees over $200,000 when we were called in to help.
How can a manager or Board assure themselves that superannuation obligations are being met?
Your payroll system should automatically calculate superannuation each pay run and automatically make the provision to the Super Payable liability account. Your financial reports will give you clues as to whether this is happening.
You should see the superannuation expense in the profit & loss increase throughout the financial year, hopefully in line with budget, if your wages costs are as expected. Looking at the balance sheet, you should see the superannuation liability account move. The balance will increase with each pay run, and then will drop back when payment is made to employee super funds.
You may never see the liability account at nil, as another payroll may add to the balance before the monthly or quarterly instalment is due to be paid, but you should expect it to move up and down in line with your super payment cycle.
If those clues aren’t apparent to you in your financial reports, we recommend seeking more information so you can be assured that you are meeting your compliance obligations. With the advent of Single Touch Payroll – all employers are required to be in the system from October 2019 – the ATO now receives detailed payroll information every time pays are processed and lodged with them. They will be able to data match with the super funds and will also be able spot non-lodgement of payroll data – so the opportunities for employers to behave badly without detection are fewer than ever.
To find out more, contact our team today.