Speaking to Accountants Daily, TaxBanter senior tax trainer Robyn Jacobson said that, under the law, an employer has an SG shortfall for a quarter if they do not make SG contributions at all or by the due date, meaning an employer who makes an SG contribution even one day late will be liable for the SGC, which is not tax-deductible.
However, in practice, she has observed some practitioners treating a late contribution as non-deductible, without lodging an SG statement.
“What’s happening in many cases is the employer or the accountant looks at the contribution, they determine that it is late and it has been added back as non-deductible for tax purposes which means they are not claiming a tax deduction for it, it is going into the tax rec as a non-deductible amount and, in many cases, no further action is taken by the employer,” Ms Jacobson said.
“Unless they take the extra step of paying the charge, making the disclosure and lodging the SG statement, the contribution is still deductible and they still haven’t dealt with the SG issue.
“The Income Tax Assessment Act cannot be used to manage an SG shortfall; they are separate pieces of legislation.”
Ms Jacobson notes a late contribution without disclosing the shortfall to the ATO is technically not SGC and is therefore still tax-deductible.
“Nothing in the tax and superannuation laws treats a late contribution as being non-deductible just because it’s late,” she said.
“It is non-deductible when it is superannuation guarantee charge, but this is a self-assessment regime, so if the employer is never actually lodging the SG statement, if they are not disclosing the shortfall to the ATO and if they are not paying all the components of the charge, then the SG shortfall has never been dealt with.”
However, Ms Jacobson also pointed out that an employer can elect for a late payment to be treated as an offset against the SGC, but only for late payments made after the 28th day after the end of the quarter and before the ATO issues a default assessment or the employer lodges the SG statement. Contributions treated as an offset under section 23A of the SG (Admin) Act are non-deductible.
SG amnesty and STP
With the ATO announcing its “unprecedented level of visibility” on SG contributions due to the introduction of STP, and the recent reintroduction of the proposed SG amnesty into Parliament, Ms Jacobson believes the time is ripe for employers to revisit and come clean on any historic non-compliance.
“Bearing in mind that there is greater transparency over SG shortfalls than ever before because of STP reporting, the likelihood of the ATO detecting the non-compliance has increased,” Ms Jacobson said.
“If they don’t come forward, there will be a minimum 100 per cent Part 7 penalty imposed on the employers plus the GIC and the nominal interest calculations that are still ticking away for every day that the SG statement is outstanding.”
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.