House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Treasurer, the Hon John Dawkins, M.P.)

Chapter 9 Penalties

Overview of the Chapter

This chapter discusses the penalties associated with:

•

the late payment of the superannuation guarantee charge;

•

failure to provide statements and information;

•

false and misleading statements; and

•

avoidance of the superannuation guarantee charge.

Explanation

Late payment penalties

If an employer pays the superannuation guarantee charge after the date the charge is due, the employer is liable for a late payment penalty. The rate of the late payment penalty is the rate set out in the Taxation (Interest on Overpayments)Act 1983. The rate is currently 14.026% per annum. The penalty is calculated from the date when the payment was due until the date the payment is made. The penalty is applied to the amount unpaid less the employer's administration component and nominal interest component. If an employer is given an extension of time to pay the charge, late payment penalty still applies from the date the charge was originally payable.

Example

Assume an employer lodges a superannuation guarantee statement on 14 August 1993. The employer's superannuation guarantee shortfall is made up as follows:

Total employer individual superannuation guarantee shortfalls	$5000.00
Employer's nominal interest component	787.76
Employer's administration component	200.00
Total	$5987.76

The Commissioner gives the employer an extension of time until 30 September 1993 to pay the charge outstanding. The employer's late payment penalty is:

$5,000 * (14,026 / 100) * (47 / 365) = $90.30


If an employer is late in paying additional superannuation guarantee charge in respect of penalties impose on the employer a late payment penalty will be imposed on the additional charge. [Clause 46]

Failure to provide statements or information

If an employer fails to provide, as required by the Bill, a superannuation guarantee statement or information for assessing the employer's liability to pay superannuation guarantee charge, the employer will be liable for a penalty. This penalty covers failure to lodge superannuation guarantee statements by the due date (see chapter 5). The maximum amount of the penalty is 200% of the amount of superannuation guarantee payable by the employer in the year. [Subclause 54(1)]

A similar rate of penalty applies when an employer fails to keep details or fails to produce evidence, of the basis of calculation of certain amounts shown in the superannuation guarantee statement, namely:

•

the employer's annual national payroll for the employer's base year;

•

the amount of each individual superannuation guarantee shortfall;

•

the amount of the nominal interest component for the year;

•

the amount of the administration component for the year. [Subclause 54(2)]

A minimum penalty of $20 applies in the above circumstances. [Subclause 54(3)]

Penalties for false and misleading statements

Employers that make a false and misleading statement which results in a reduced superannuation guarantee charge are liable for a maximum penalty of 200% of the charge avoided. The minimum penalty is $20. A false or misleading statement may be made to a taxation officer or to another person for the purposes of the Bill. A statement may be made orally, in writing, in a data processing device or in any other form. [Clause 55]

Arrangements to avoid superannuation guarantee charge

If an employer enters into an arrangement to reduce the liability for superannuation guarantee charge, and the Commissioner considers that the arrangement was solely or principally to avoid the charge, the employer will be liable to pay the amount avoided. An employer will not be taken to be avoiding the charge where the employer makes acceptable superannuation contributions for the benefit of employees. [Clause 27]

If the Commissioner considers the employer has entered into an arrangement to avoid the charge, a penalty of up to 200% of the amount of charge avoided can be applied. [Clause 56]

Additional superannuation guarantee charge

The liabilities arising from the penalties are known as 'additional superannuation guarantee charge'. The Commissioner must make an assessment of additional superannuation guarantee charge (other than late payment penalty), and as soon as practicable, give a written notice of assessment to the employer. The notice may be incorporated in any other notice of assessment given to the employer. [Subclauses 57(1) and (2)]

Remission of Penalty

The Commissioner may at any time remit all or part of the additional superannuation guarantee charge (other than late payment penalty). [Subclause 57(3)]