Remission of penalties that apply for failing to report employer and total contributions in the approved form

Under the Superannuation Guarantee (Administration) Act 1992 (the SGAA), superannuation providers [1] are required to give the Commissioner a statement on an annual basis [2] which sets out: • * the total of all contributions made by an employer [3] on behalf of an employee to the superannuation fund or retirement savings account (RSA) in a year, [4] and • * the total of all contributions made to the fund or RSA for the benefit of that employee in the year. [5]

The statement must be provided to the Commissioner in the approved form [6] by the lodgment due date for the year [7] . A superannuation provider is only required to give the Commissioner a statement in the approved form in respect of employees who had a contribution made for their benefit by an employer in the year. [8]

If a superannuation provider transfers an amount to another superannuation fund or RSA, the superannuation provider must give the other fund or RSA a statement in the approved form that sets out details of employer and total contributions transferred [9] . The statement must be provided within 30 days after the day on which the amount is transferred. [10]

An administrative penalty of 5 penalty units [11] applies for each person for whom the superannuation provider fails to report within the prescribed time and in the approved form. A penalty unit is currently equivalent to $110. [12] The Commissioner has the discretion to remit all or part of the penalty. [13]

The Commissioner must give the superannuation provider a written notice of the superannuation provider's liability to pay the penalty and of the reasons why the penalty has been imposed. However, the Commissioner is not required to give reasons if he decides to remit the penalty in full. [14]

If the Commissioner refuses to any extent to remit the penalty and the amount of penalty payable after the refusal is more than 2 penalty units, then the superannuation provider may lodge an objection against the decision. [15]

The remission guidelines contained in paragraphs 9 to 14 apply to penalties imposed under sections 78 and 78A of the SGAA, where a superannuation provider fails to report employer and total contributions made or transferred during the reporting period from 1 July 2005 to 30 June 2006.

Sections 78 and 78A of the SGAA were repealed by the Tax Laws Amendment (Simplified Superannuation) Act 2007 . These sections do not apply to things that are done or events that have occurred on or after 1 July 2007. Superannuation reporting requirements are now contained in Division 390 of Schedule 1 to the Taxation Administration Act 1953.

The remission guidelines do not apply to penalties imposed for failing to report contributions under the Superannuation (Government Co-Contribution for Low Income Earners) Act 2003 . Superannuation providers have been required to report for Super Co-contribution purposes from 1 July 2003 and should have the necessary information recorded on their systems to satisfy the Super Co-contribution reporting requirements.

The Commissioner regards the reporting period from 1 July 2005 to 30 June 2006 to be an introductory period for the superannuation guarantee (SG) reporting requirements. Due to the retrospective nature of the law the Commissioner recognises that superannuation providers may experience difficulties in satisfying their SG reporting obligations for the introductory period.

The Commissioner also recognises that non-compliance by superannuation providers with the SG reporting requirements for the introductory period may be the result of factors beyond their control, or as a result of a lack of knowledge and/or business readiness rather than a non-compliant attitude.

It is acknowledged that, despite a superannuation provider's best efforts to satisfy its SG reporting obligations, genuine mistakes and misunderstandings may occur. Therefore, superannuation providers will be provided with assistance and support as the first step to improving compliance with the SG reporting requirements for the introductory period.

Circumstances where the Commissioner would generally consider it appropriate to remit the penalty in full would include (but are not limited to) where: • the superannuation provider has not provided contribution details to another fund or RSA as part of a rollover or transfer during the introductory period, as they were unaware of the requirement to do so at the time the transfer took place • the superannuation provider is unable to report the required information to the Tax Office for part or all of the introductory period as the information was not provided to them by the transferring fund or RSA • the superannuation provider has substantially complied with its reporting obligations for the introductory period by reporting all of the relevant information it has recorded on its systems for the period, or • the superannuation provider has been unable to report for the introductory period as it does not have the relevant information recorded on its systems.

However, the Commissioner would not consider it appropriate to remit the penalty in full where: • the superannuation provider has consistently failed to lodge a Superannuation member contributions statement (MCS) in previous years • the superannuation provider has failed to respond to a written notice under section 77 of the SGAA, for example where the Commissioner has requested details of contributions made by the employer [16] • the superannuation provider has failed to make a genuine attempt to satisfy its SG reporting requirements for the introductory period, or • the superannuation provider has taken steps to hinder or obstruct [17] a Tax Officer from finding out about the superannuation provider's failure to satisfy its reporting requirements.

Decisions will be made on a case by case basis taking into account the individual circumstances of the superannuation provider and the effort the superannuation provider has made to comply with the SG reporting requirements. Any decision to remit penalties will be made in accordance with the Tax Office's compliance model and the taxpayers' charter.

For financial years before 1 July 2005, superannuation providers were required to report contributions to the Tax Office for superannuation contributions surcharge purposes on an annual basis. [18] This reporting requirement was removed as a result of the abolition of the surcharge from 1 July 2005.

The Minister for Revenue and Assistant Treasurer announced in a Press Release on 2 February 2006 that the practice of requiring superannuation providers to report contributions to the Tax Office on an annual basis would continue. [19]

The reason for continuing the reporting requirements is to provide the Tax Office with important data for its administration of the superannuation guarantee. In his announcement the Minister for Revenue and Assistant Treasurer stated that 'the reporting system will capture information necessary to ensure that employees receive their superannuation guarantee entitlements while minimising disruption to employers and superannuation providers'.

The SGAA was subsequently amended by the Tax Laws Amendment (2006 Measures No. 3) Act 2006 [20] (Act No 80 of 2006) to require superannuation providers to report details of superannuation contributions in the approved form for the 2005-06 financial year and later years. The amendments received Royal Assent on 30 June 2006 and apply retrospectively from 1 July 2005 in respect of contributions made or transferred on or after that date.

Under the revised arrangements, superannuation providers are required to report to the Tax Office by the lodgment due date for the year, the total of all contributions made by an employer for an employee to the fund or RSA during the year, as well as the total of all contributions made for the employee to the fund or RSA during the year. Superannuation providers are also required to report contributions made during the year that have been transferred out of the fund or RSA to the receiving superannuation provider within 30 days of the transfer taking place.

As the revised reporting arrangements were not announced until 2 February 2006, superannuation providers may not have the relevant information recorded on their systems for the period from 1 July 2005 to 2 February 2006.

Similarly, superannuation providers may not have reported contributions that have been transferred out of the fund or RSA to the receiving superannuation provider during the period from 1 July 2005 to 2 February 2006 as they were unaware that they would be required to do so at the time the transfer took place.

In acknowledging the difficulties that superannuation providers may have in satisfying their SG reporting requirements for the 2005-06 financial year, the Commissioner will generally exercise his discretion to remit the administrative penalty in full where the superannuation provider has made a genuine attempt to satisfy its SG reporting requirements for the year, or has been unable to report for part or all of the year as a result of not having the relevant information recorded on its systems.

The Commissioner will adopt a 'business as usual' approach to the administration of the SG reporting requirements for the 2006-07 financial year and future years. It is considered that by this time superannuation providers will have had sufficient opportunity to understand and comply with the SG reporting requirements.

While the Commissioner will continue to provide education and assistance to superannuation providers to help them satisfy their SG reporting requirements, the remission guidelines set out in this practice statement will no longer apply in respect of contributions made on or after 1 July 2006.