Chapter 1


Referral of the inquiry

The Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019 (the bill) was introduced in the House of Representatives and read a first time on 18 September 2019.1
On 19 September 2019, the Senate referred the provisions of the bill to the Economics Legislation Committee (the committee) for inquiry and report by
7 November 2019.2

Purpose of the bill

The primary purpose of the bill is to amend the Superannuation Guarantee (Administration) Act 1992 (SGAA 1992) to encourage employers to voluntarily disclose historical superannuation guarantee (SG) non-compliance and pay an employee's full entitlement.3 The bill seeks to achieve this objective by introducing a one-off SG amnesty.4
As emphasised by the Assistant Treasurer, the Hon. Michael Sukkar MP, in his second reading speech:
Reuniting as many workers as possible with the superannuation that is rightly theirs must be the priority.5


SG rules

Set out in the SGAA 1992, the SG rules ensure that employees have a minimum (i.e. guaranteed) level of superannuation contributions in respect of their employment. The SG is currently 9.5 per cent of an employee's ordinary time earnings (OTE) and must be paid into a complying super fund at least four times a year, by the quarterly due dates.6

SG gap

For the six-year period between 2011–12 and 2016–17, the Australian Taxation Office (ATO) estimates the net superannuation guarantee gap—that is, the difference between the value of SG contributions required to be paid under the SG rules and SG contributions actually paid—to be $2.3 billion. This represents 3.9 per cent of the theoretical estimated SG amount employers were required to pay for that period.7

SG charge

Compliance with the SG rules is encouraged through the imposition of a tax (SG charge) on employers who fail to contribute a minimum percentage of their employees’ OTE into superannuation.8
The SG charge is composed of the total of an employer's individual
SG shortfalls, the employer's nominal interest component, and a $20 per employee per quarter administration component.9
Where employers do not meet their SG obligations by the relevant quarterly due date, they are liable to pay to the Commissioner of Taxation (the Commissioner) an amount of SG charge equal to their ‘SG shortfall’ for that quarter.10
As summarised in the Explanatory Memorandum (EM) to the bill:
Generally, an employer can deduct from their assessable income contributions they make on behalf of their employees that reduce the employer’s SG shortfall. However, consistent with the treatment of other taxes, SG charge is not deductible. Late contributions that an employer has elected to offset against their SG charge liability are also not deductible.11

SG Integrity Package

The one-off SG amnesty is intended to complement the government's package of reforms to improve SG compliance—the Superannuation Guarantee Integrity Package—which were recently enacted though the Treasury Laws Amendment (2018 Measures No. 4) Act 2019.12 Those reforms improve the visibility of SG payments to the ATO, introduce stronger penalties for
non-compliance, and ensure more reliable collection of liabilities for unpaid SG in the future.13

Previous committee inquiry

Most amendments proposed in the bill were previously introduced to Parliament on 24 May 2018 as part of the Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2018. That bill was also referred to the committee, but lapsed at the end of the 45th Parliament.
The committee's previous inquiry report, which was tabled on 18 June 2018, noted that most of the individuals and organisations who gave evidence to the inquiry supported the one-off SG amnesty measure. In particular, the committee's report noted that:
Organisations representing small businesses welcomed the amnesty as encouraging small businesses to come forward and do the right thing by their employees, and as a means of establishing a base of compliance for when the increased visibility, stronger enforcement and higher penalties in the Treasury Laws Amendment (2018 Measures No. 4) Bill 2018 come into operation.14

Overview of the bill

The bill, which contains one schedule, amends the SGAA 1992 and makes consequential amendments to the Income Tax Assessment Act 1997 (ITAA 1997).15
As previously noted, the amendments to the SGAA 1992 seek to introduce a one-off SG amnesty. The amnesty aims to encourage employers to voluntarily disclose historical SG non-compliance to the Commissioner and pay an employee's full SG entitlement.16
The amendments generally apply from 24 May 2018, being the day that the amnesty was first announced.17
The amnesty period is the period that started on 24 May 2018 and ends
6 months after the bill receives Royal Assent.18

Beneficial treatment under the amnesty

The bill allows employers that qualify for the amnesty (see paragraphs 1.23–1.26) to claim deductions from their tax assessable income for payments of
SG charge or contributions made during the amnesty period to offset
SG charge. Payments made after the end of the amnesty period, even if they relate to SG shortfalls disclosed under the amnesty, will not qualify for tax deductions.19
The bill also reduces to nil the penalties and fees that an employer may otherwise be liable to in relation to historical SG non-compliance.20 In particular, an employer that has an amount of SG shortfall for a quarter that qualifies for the amnesty:
does not have any administrative component in respect of the SG shortfall; and
is not liable to Part 7 penalties, imposed under section 59 of the
SGAA 1992,21 for a failure to lodge an SG statement in respect of the shortfall by the relevant quarterly due date.22
The beneficial treatment provided to employers by the amnesty is available in relation to quarters starting on 1 July 1992, being the day the SGAA 1992 commenced, up to and including the quarter ending at least 28 days before the start of the amnesty period (that is, the quarter starting on 1 January 2018). An employer will not be able to benefit from the amnesty for shortfalls relating to the quarter starting 1 April 2018 or subsequent quarters.23
The EM notes that this timeframe covered by the amnesty 'ensures that the amnesty addresses historical non-compliance and is not available for
non-compliance that occurs after the amnesty is announced'.24
The deductibility of payments of SG charge or offsetting contributions made during the amnesty period applies in relation to the 2017–18 and later income years, as do the consequential amendments to the ITAA 1997 (discussed below).25

Qualifying for the amnesty

To qualify for the amnesty, an employer must disclose to the Commissioner information related to an SG shortfall for a quarter that ends at least 28 days before the start of the amnesty period.26
Further, an employer qualifies for the beneficial treatment provided by the amnesty in relation to an amount of SG shortfall if the disclosure to the Commissioner:
is made during the amnesty period;
relates to an amount of SG shortfall not previously disclosed; and
is in the approved form.27
In addition, for disclosure in respect of a quarter to qualify for the amnesty, the Commissioner must not have, at any time before the disclosure, informed the employer that the Commissioner is examining, or intends to examine, the employer's compliance with their obligation to pay SG charge for that quarter.28
An employer may cease to qualify for the amnesty, and consequently lose all benefits from the amnesty, if the employer fails to pay, or enter into and comply with arrangements to pay, any SG charge imposed on a disclosed
SG shortfall.29

Penalties for employers that do not come forward

To strengthen the operation of the amnesty, where an employer fails to disclose information relevant to their historical SG shortfall during the amnesty period, the amendments in the bill also seek to limit the Commissioner's ability to remit Part 7 penalties (except under exceptional circumstances) for historical SG non-compliance.30
Specifically, as outlined in the EM:
This limit ensures that the Commissioner cannot remit penalties imposed under section 59 below 100 per cent of the amount of SG charge payable by the employer for a historical quarter that was covered by the amnesty where the employer did not disclose the shortfall as part of the amnesty.31
The amendments limiting the Commissioner's ability to remit Part 7 penalties under the SGAA 1992 commence on the day after the amnesty period ends.32
These amendments restricting the Commissioner's ability to remit Part 7 penalties (schedule 1, item 13) are additional to the amendments contained in the Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2018 that was previously introduced during the 45th Parliament.

Consequential Amendments

The bill makes consequential amendments to the ITAA 1997 to include a definition of 'superannuation guarantee shortfall', and to ensure the ITAA 1997 accurately reflects changes to the law relating to the deductibility of SG charge for 2017–18 and subsequent income years.33
The bill also includes amendments to ensure employees are not disadvantaged as a result of the amnesty. Specifically, in respect of contributions recovered under the amnesty, these amendments ensure that:
the Commissioner can exercise discretion to make a determination to disregard concessional contributions, or allocate them to another financial year, for contributions made by the Commissioner in the 2017–18 and later income years;34 and
contributions made by the Commissioner and late contributions made by an employer to offset their liability to pay SG charge will not attract additional tax under Division 293 of the ITAA 1997 for the 2017–18 and later income years.35

Financial impact

The EM states that the proposed measure is estimated to result in a gain to the budget of $99 million in fiscal balance terms over the five-year period to

Legislative scrutiny

The bill was considered by the Senate Standing Committee for the Scrutiny of Bills, which had no comment.37

Compatibility with Human Rights

As required under the Human Rights (Parliamentary Scrutiny) Act 2011, the government has assessed the bill's compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The government considers that the bill is compatible.38

Conduct of the inquiry

The committee advertised the inquiry on its website and wrote to relevant stakeholders inviting written submissions by 3 October 2019.
The committee received 12 submissions, as well as answers to questions on notice and additional information, which are listed at Appendix 1.
The committee held one public hearing for the inquiry in Sydney on
30 October 2019. The names of witnesses who appeared at the hearing can be found at Appendix 2.
References to the Committee Hansard are to the Proof Hansard and page numbers may vary between Proof and Official Hansard transcripts.


The committee thanks all individuals and organisations who participated in the inquiry, especially those who made written submissions and participated in the public hearing.

  • 1
    Votes and Proceedings, No. 18, 18 September 2019, p. 277.
  • 2
    Journals of the Senate, No. 19, 19 September 2019, p. 569.
  • 3
    An employee's full SG entitlement comprises the employee's individual SG shortfall, nominal interest, and any related general interest charge on unpaid amounts of SG charge.
  • 4
    Explanatory Memorandum, p. 3.
  • 5
    The Hon. Michael Sukkar MP, Assistant Treasurer, House of Representatives Hansard,
    18 September 2019, p. 20.
  • 6
    See Australian Taxation Office, Super for employers, (accessed 23 October 2019).
  • 7
    See Australian Taxation Office, Superannuation guarantee gap,
    (accessed 23 October 2019).
  • 8
    Explanatory Memorandum, p. 5.
  • 9
    Explanatory Memorandum, pp. 5–6.
  • 10
    Explanatory Memorandum, p. 5.
  • 11
    Explanatory Memorandum, p. 6.
  • 12
    The Treasury Laws Amendment (2018 Measures No. 4) Bill 2018 passed the Parliament on
    12 February 2019, and received Royal Assent on 1 March 2019. The committee also inquired into the provisions of that bill during the 45th Parliament, tabling its inquiry report on 13 June 2018.
  • 13
    Explanatory Memorandum, p. 3.
  • 14
    Senate Economics Legislation Committee, Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2018 [Provisions], June 2018, p. 9.
  • 15
    Items 10–14 of schedule 1 to the bill amend the SGAA 1992, and items 1–9 of schedule 1 make consequential amendments to the ITAA 1997.
  • 16
    Explanatory Memorandum, p. 3.
  • 17
    Explanatory Memorandum, pp. 3, 24.
  • 18
    Explanatory Memorandum, p. 10.
  • 19
    Explanatory Memorandum, p. 15.
  • 20
    Explanatory Memorandum, pp. 7, 14–15.
  • 21
    Section 59 of the SGAA 1992 requires that, if an employer fails to provide an SG statement or information relevant to assessing the employer's liability to pay SG charge when and as required to do so under the Act, the employer is liable to pay, by way of penalty, additional SG charge equal to double the amount of SG charge for the relevant quarter. See Superannuation Guarantee (Administration) Act 1992, s. 59(1), (accessed 23 October 2019).
  • 22
    Explanatory Memorandum, pp. 14–17.
  • 23
    Explanatory Memorandum, p. 10.
  • 24
    Explanatory Memorandum, p. 10.
  • 25
    Explanatory Memorandum, pp. 24–25.
  • 26
    Explanatory Memorandum, p. 7.
  • 27
    Explanatory Memorandum, pp. 9–12.
  • 28
    Explanatory Memorandum, p. 11.
  • 29
    Explanatory Memorandum, p. 7.
  • 30
    Explanatory Memorandum, pp. 3, 7, 17.
  • 31
    Explanatory Memorandum, p. 7.
  • 32
    Explanatory Memorandum, p. 25.
  • 33
    Explanatory Memorandum, p. 22.
  • 34
    Contributions recovered and paid to an employee as a result of the amnesty would be considered concessional contributions and may cause employees to exceed their annual concessional contributions cap. Concessional contributions that exceed the concessional cap are included in an individual's assessable income. In allowing the Commissioner to issue a determination to disregard concessional contributions made under the SG amnesty, employees will not be disadvantaged by contributions representing late SG payments. See Explanatory Memorandum,
    pp. 22–23.
  • 35
    Explanatory Memorandum, p. 25.
  • 36
    Explanatory Memorandum, p. 3.
  • 37
    Senate Standing Committee for the Scrutiny of Bills, Scrutiny Digest 7 of 2019, 17 October 2019,
    p. 42.
  • 38
    Explanatory Memorandum, p. 27.

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