On Thursday, 21 June 2018, the Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2018 passed the Lower House and moved to the Senate.
Prior to that, on Monday, 18 June 2018, the Senate Economics Legislation Committee has released its report and recommended the Bill be passed. The Labor Senators on the Committee, however, opposed the superannuation guarantee amnesty measure.
The Bill includes the following measures:
- SUPER GUARANTEE AMNESTY: A one-off 12-month amnesty will enable employers to self-correct historical underpayments of Super Guarantee (SG) amounts without incurring additional penalties that would normally apply. Importantly, SG charge payments (and offsetting contributions) made during the amnesty period will be tax deductible for the employer. DATE OF EFFECT: The amendments to the SGAA and ITAA97 will apply from 24 May 2018 – the start date for the amnesty which will run until 24 May 2019. It applies to SG shortfalls as far back as 1 July 1992 (the inception of the legislation) but will not apply to shortfalls for quarters starting from 1 April 2018. To qualify for the amnesty, a disclosure must be made to the ATO in the approved form (and must not have been previously disclosed).
- SUPER GUARANTEE OPT-OUT: High-income employees with multiple employers will be able to opt-out of the Super Guarantee regime to avoid unintentionally breaching the $25,000 concessional contributions cap. Instead of receiving compulsory SG contributions from multiple employers, such employees with income exceeding $263,157, will be able to apply to the ATO for an “employer shortfall exemption certificate”. The ATO can only issue a certificate at the request of an employee (not the employer) who would otherwise be likely to exceed the concessional cap. The employee must still have at least one other employer liable to make SG contributions on their behalf (Note: the SG law already has maximum amounts an employer must make, which would not push the employee over the $25k limit, as long as there is only one employer contributing. DATE OF EFFECT: 1 July 2018.
- NON-ARM’S LENGTH INCOME: The NALI provisions in s 295-550 of the ITAA 1997 will be expanded so that superannuation funds (including SMSFs) are taxed at 45% for related-party schemes involving non-arm’s length expenses not incurred (eg reduced interest rates). DATE OF EFFECT: 1 July 2018, regardless of whether the scheme was entered into before that time.
- LIMITED RECOURSE BORROWING ARRANGEMENTS: A member’s share of the outstanding balance of certain LRBAs will be included in the member’s “total superannuation balance” (TSB) under s 307-230 of the ITAA97. Note that the Government has revised its original proposal so that the amendments will only apply to increase the TSB for members who have satisfied a Nil condition of release (eg permanently retired or attained age 65), or for a related-party LRBA between the SMSF and its “associate”. DATE OF EFFECT: Only applies to new LRBAs entered on or after 1 July 2018. Refinancing of existing loans entered into prior to that date will be excluded.
FJM 10.6.18
[APH website: Senate Committee Report; Related TT Article: Exposure Draft Announced, SG Amnesty; LTN 115, 19/6/18; KPMG 19/6/18 & 21/6/18; Tax Month – June 2018]
Study questions (answers available)
- Did the Senate Committee recommend that the Bill be passed (albeit with Labor Senators opposed to the SG Amnesty)?
- Does the SG Amnesty stretch back to liabilities the beginning of the SGC regime: on 1 July 1992?
- Is the ‘Opt-out’ of SGC employer obligations, available for high earning employees (to avoid exceeding the $25k limit) available for employees with only one employer?
- Will NALI now be extended to non-arm’s length expenses (not just income)?
