ATO Interpretative Decision

ATO ID 2008/28

Superannuation

Superannuation guarantee: liability of liquidator for superannuation guarantee charge in respect of a GEERS advance
FOI status: may be released

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CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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Issue

Does the Superannuation Guarantee (Administration) Act 1992 (SGAA) impose a liability on a liquidator to pay the superannuation guarantee charge (SGC) out of its own funds if the liquidator fails to make sufficient superannuation contributions by the relevant quarterly cut-off date in respect of a General Employee Entitlements and Redundancy Scheme (GEERS) advance the liquidator paid to a former employee of the company?

Decision

No. The SGAA does not impose a liability on a liquidator to pay the SGC out of its own funds if the liquidator fails to make sufficient superannuation contributions by the relevant quarterly cut-off date in respect of a GEERS advance the liquidator paid to a former employee of the company.

Facts

A company became insolvent and a liquidator was appointed.

The effect of the liquidation was the termination of the employment of an employee of the company.

At the date of liquidation, the company owed amounts to the employee for unpaid wages, unpaid annual leave and unpaid long service leave

The company's employee made a claim with the Department of Employment and Workplace Relations (DEWR) for his entitlements for unpaid wages, unpaid annual and long service leave under the GEERS. The GEERS is a payment scheme designed to assist people who have lost their jobs as a result of their employer becoming bankrupt or entering into liquidation, and who are owed certain employee entitlements.

The employee's claim for GEERS assistance was accepted by DEWR.

DEWR paid the GEERS advance to the liquidator. After withholding PAYG tax from the advance, the liquidator forwarded the GEERS advance to the employee but did not make superannuation contributions in respect of the unpaid wage component of the advance (the employee's notional earnings base), by the relevant quarterly cut-off date.

Reasons for Decision

Section 16 of the SGAA states that the SGC is payable by the employer. This obligation is generally not changed by the liquidation process. Section 52 of the SGAA states that in the winding up of a company, any SGC payable by the company is, for the purposes of the payment, to have a priority equal to that of a debt of a company of the kind referred to in paragraph 556(1)(e) of the Corporations Act 2001 (Corporations Act).

There is no provision in the SGAA imposing a personal liability upon a liquidator or other external administrator for payment of the SGC. Therefore, if the liquidator fails to make sufficient superannuation contributions by the relevant quarterly cut-off date in respect of a GEERS advance the liquidator paid to a former employee of the company, the liability to the SGC remains with the company.

Note: as a result of amendments made by the Corporations Amendment (Insolvency) Act 2007, which received Royal Assent on 20 August 2007, the SGC will no longer be afforded priority in liquidation pursuant to section 52 of the SGAA. It will instead be given priority under section 556 of the Corporations Act. The repeal of section 52 of the SGAA, and the concomitant application of section 556 of the Corporations Act to the SGC, will take effect on the date fixed by Proclamation or the first day after the end of the period of six months after Royal Assent. However, this change will not affect the view that the SGAA does not impose a liability on a liquidator to pay the SGC out of its own funds.

Date of decision: 23 January 2008

Year of income: Year ended 30 June 2008

Legislative References:
Superannuation Guarantee (Administration) Act 1992
section 16
section 52

Corporations Act 2001
section 556
paragraph 556(1)(e)

Corporations Amendment (Insolvency) Act 2007
The Act

Related ATO Interpretative Decisions
ATO ID 2008/25
ATO ID 2008/26
ATO ID 2008/27

Keywords
Employees
Liquidation
Superannuation guarantee charge

Business Line: Superannuation

Date of publication: 8 February 2008

ISSN: 1445-2782

history

	Date:	Version:
You are here	23 January 2008	Original statement
	5 June 2015	Archived

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