ATO Interpretative Decision

ATO ID 2015/15 (Withdrawn)

Superannuation

Superannuation guarantee: liability of liquidator for superannuation guarantee charge in respect of a Fair Entitlements Guarantee advance

ATO ID 2015/15 is withdrawn, and is replaced by SGD 2017/1 Superannuation guarantee: is an advance paid under section 28 of the Fair Entitlements Guarantee Act 2012 to a former employee 'salary or wages' paid by the employer to the employee for the purposes of working out a superannuation guarantee charge liability under the Superannuation Guarantee (Administration) Act 1992?

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If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

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 Fair Entitlements Guarantee (FEG) 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 FEG 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 for his entitlements for unpaid wages, unpaid annual and long service leave under the FEG. The FEG 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 FEG assistance was accepted by Department of Employment.

Department of Employment paid the FEG advance to the liquidator. After withholding PAYG tax from the advance, the liquidator forwarded the FEG advance to the employee but did not make superannuation contributions in respect of the unpaid wage component of the advance (the employee's ordinary time earnings), 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. 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 FEG advance the liquidator paid to a former employee of the company, the liability to the SGC remains with the company.

Note: The Fair Entitlements Guarantee (FEG) replaces the General Employee Entitlements and Redundancy Scheme (GEERS) from 5 December 2012. FEG is a scheme that provides assistance to employees who have lost their employment due to liquidation or bankruptcy of their employer and who are owed certain employee entitlements.

Date of decision: 24 March 2015

Year of income: From 5 December 2012

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

Fair Entitlement Guarantee Act 2012 (FEG)
The Act

Related ATO Interpretative Decisions
ATO ID 2008/26
ATO ID 2015/13
ATO ID 2015/14

Keywords
Employees
Liquidation
Superannuation guarantee charge

Business Line: Superannuation

Date of publication: 5 June 2015

ISSN: 1445-2782

history

	Date:	Version:
	5 June 2015	Original statement
You are here	13 April 2017	Archived

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