What’s emerging? Finalised ATO guidance on remission of 200% SGC penalty
The ATO have finalised PS LA 2021/3, the third practice statement under Part 7 of the 200% Superannuation Guarantee Charge - 10 December 2021
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On 25 November 2021, the ATO finalised PS LA 2021/3, the ATO’s practice statement on the remission of the additional 200% Superannuation Guarantee Charge (SGC) imposed under Part 7 of the Superannuation Guarantee (Administration) Act 1992 (SGAA).
The finalised PS LA 2021/3 reiterates the same principles adopted in the draft version, PS LA 2021/D1. This includes a greater emphasis on employer proactivity, and effective controls and processes. In particular, the finalised PS LA, like its corresponding draft version, places a significant emphasis on an employer’s SG compliance history in dictating an increase or decrease in remission, with a clear mandate on preventing repeat errors and implementing governance that mitigates such occurrences.
Further, the PS LA is also emphatic on the legislative limitations regarding remitting the penalty, in instances where an employer doesn’t voluntarily disclose shortfalls prior to ATO compliance action, particularly for periods that were covered during the SG Amnesty, except for “exceptional circumstances”.
The PS LA also singles out utility of Single Touch Payroll (STP) data, which when coupled with reporting of contributions from superannuation funds, will provide “end-to-end visibility” and enable the ATO to “engage with employers” who do “not come forward voluntarily”.
With the advent of STP 2 reporting, which will enable more granular and accurate reconstruction of employers’ Superannuation Guarantee obligations (read more at our previous STP 2 article), employers should be particularly proactive with ensuring compliance. This is both with respect to payroll system setup and associated reporting against STP 2 guidelines, but also in terms of ongoing testing and monitoring to ensure that, where inadvertent errors arise, remedial measures are taken in a timely manner and, importantly, before ATO compliance action.
The main change between draft and finalisation was the process of remission for SGC statements lodged on time, noting that both versions result in the same outcome. In the draft PS LA 2021/1, SGC statements lodged before the due date resulted in a 100% remission, whereas in the finalised version, there is no need for remission as no Part 7 penalties are imposed in this circumstance.
Given this is the third PS LA in a two year period, it is clear that superannuation compliance is at the forefront of the ATO’s mind, particularly post the SG Amnesty. Given the more punitive nature of the new PS LA (please see our prior article on the draft PS LA 2021/D1 for further examples) and the highlighting of the use of STP data to proactively police compliance, we recommend that employers take steps to ensure strong governance around their superannuation compliance environment.
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