Superannuation guarantee charge: remission of penalties

Will the Commissioner remit late payment penalties (LPP) (applicable only for the period 1 July 1992 to 30 June 1999) and / or Part 7 penalties imposed under the Superannuation Guarantee (Administration) Act 1992 (SGAA)?

No. The Commissioner has no power under the SGAA to remit the LPP. In addition, the Commissioner will not exercise his discretion under subsection 62(3) of the SGAA to remit all or part of the Part 7 of the SGAA penalties.

The employer made superannuation contributions on behalf of its employees to a superannuation fund that the employer established. The fund is not a complying superannuation fund and therefore the employer's contributions do not satisfy the general rule under the SGAA that contributions must be made to a complying superannuation fund. The employer states that it was unaware of this requirement.

In addition, the employer failed to lodge superannuation guarantee statements.

The employer did not comply with a request to remedy the situation resulting in default assessments being raised and the imposition of Part 7 of the SGAA penalties and LPP (as the employer had not paid superannuation contributions to a complying superannuation fund by the due date).

Superannuation Guarantee Ruling SGR 94/3 explains the circumstances in which the Commissioner will exercise the discretion under subsection 62(3) of the SGAA to remit all or part of Part 7 of the SGAA penalties. The Commissioner will not remit the Part 7 of the SGAA penalties as: - the penalties were imposed as a result of the employer's failure to lodge superannuation guarantee statements and not because the employer had mistakenly provided superannuation to a non-complying fund; - the employer repeatedly delayed the process by not fulfilling the obligations as arranged between the employer and the ATO within a given prescribed period of time; - the argument of not knowing the legal duties of an employer does not justify the remittance of the Part 7 of the SGAA penalties imposed; and - section 25 of the SGAA was not applicable as either the employer, or the employer's accountant, should have been aware that the fund was non-complying as it was the employer's own superannuation fund.