Small business may be deterred from SG amnesty, flags accountant

In May, the government introduced a one-off 12-month amnesty period for small businesses to address any historical underpayment of superannuation entitlements under its SG integrity package.

The Institute of Public Accountants has urged full passage of the SG amnesty bill, with chief executive Andrew Conway saying it incentivises employers to come forward and do the right thing by their employees by paying any unpaid superannuation in full.

However, speaking to Public Accountant, Sky Accountants chief technical officer Ashley Carmichael noted that while many accountants will certainly be pushing the SG amnesty on their clients, he thinks a lot of small businesses would be fearful of disclosing their issues.

“What you're seeing is that when businesses struggle, there are certain types of payments that stop getting made, and the Tax Office is generally one of the first ones who stop getting paid. Then it's the employee super, and so on and so forth,” Mr Carmichael said.

“By-and-large, it's not businesses that are maliciously choosing not to pay their super, they just simply got themselves in a very bad cash flow position and can't pay it.

“No business really wants the ATO's attention. I think they would be fearful that putting their hand up for this could lead to audit activity in the future.”

Last year, the government announced that the ATO would receive additional funding for an SG task force to crack down on employer non-compliance.

Uncertainty also persists around whether the SG amnesty bill will pass through Parliament, with DBA Lawyers director Daniel Butler and lawyer Christian Pakpahan saying the limbo could lead to risks for small businesses.

They said businesses that have already made disclosures to the ATO on the basis of the proposed amnesty may have therefore been misled and that, as a result, the ATO will broadly treat these as voluntary disclosures if the SG bill fails to become law.

“Further, there are still a number of serious modifications required to be made in order to make the amnesty an appropriate basis for employers to come forward with legal certainty,” Mr Butler and Mr Pakpahan said.

“Indeed, it would be preferable for the law to be introduced and passed before an amnesty of this nature is announced.”

Mr Carmichael said a better alternative would be to create a ‘blanket’ amnesty that doesn’t require businesses to notify the ATO in any way, and simply have it as a period of time within which they need to catch up on their super contribution payments.

“If they do subsequently review an employer and they find that they got their payments in by the due date, then accept that and give them the amnesty,” he said.

“But I think if there was no requirement to declare yourself, and the requirement was simply about getting your payments up to date by the end of the 12-month period, then I think a lot of businesses would make a significant effort to do so.

“It's just that declaring yourself to the tax office that makes a lot of small business people nervous and, particularly, in light of some of the more recent stories about how the tax office can be a bit heavy-handed.”