Tax Update: September 2020
Superannuation guarantee rate increase update
Recently, arguments both for and against increasing the rate of compulsory superannuation guarantee ('SG') have continued to be tossed around! The SG is the compulsory amount of superannuation an employer must pay into an eligible employee’s chosen super fund.
The rate of SG has been frozen at 9.5% of an employee’s ordinary wages since July 2014, but from 1 July 2021 it is due to incrementally increase (by 0.5% each financial year) until it ultimately reaches 12% in July 2025. As a result, the superannuation guarantee rate is currently set to increase to 10% from 1 July 2021.
Superannuation guarantee amnesty ends 7 September 2020
Speaking of the superannuation guarantee, time is rapidly running out for employers to apply for the SG amnesty and catch up on past unpaid super without incurring a penalty. The ATO encourages employers to apply for the amnesty and make payments as early as they can.
Importantly, eligible amnesty amounts paid by 7 September 2020 are tax deductible! The ATO must receive amnesty applications by 11:59 pm (local time) on 7 September 2020.
Broadly, to be eligible for the amnesty:
the unpaid super must be for a quarter between 1 July 1992 and 31 March 2018;
the shortfall cannot have already been disclosed to the ATO; and
the ATO cannot already be examining the shortfall.
If an employer cannot pay in full, the ATO will work with them to set up a flexible payment plan.
Superannuation guarantee payments and PRNs
Applicants will need their payment reference number (‘PRN’) to make SG amnesty payments. The ATO has been sending employers their PRN within 14 business days of receiving their application, however, if an amnesty application has not been lodged by mid-August, they can get their PRN:
from a super guarantee charge related statement issued for the same Australian Business Number;
by phoning the ATO on 1800 815 886 between 8.00am and 6.00pm from Monday to Friday.
Expanded eligible employee definition for JobKeeper
Additional recently implemented JobKeeper changes mean more employees will qualify for JobKeeper payments from 3 August 2020. This is primarily because:
the eligible employee test has been extended from 3 August 2020 to include eligible employees who were employed on 1 July 2020 (in addition to the original 1 March 2020 employment date) who are not currently nominated for the JKP by another entity; and
from the fortnights commencing on 3 August 2020 and 17 August 2020 (i.e., JobKeeper fortnights 10 and 11) employers will have had until 31 August 2020 to meet the ‘wage condition’ for all new eligible employees included in the JobKeeper scheme under the 1 July eligibility test.
Importantly, as a result of these recent tweaks to the JobKeeper scheme, participating employers should have provided any new eligible employees with an employee nomination form.
The onus is on employers to ensure all of their employees now eligible for JKPs as a result of the new 1 July test are given the opportunity to be included.
Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.