Tax Office updates Interpretative Decisions for Employee Fair Entitlements Guarantee

Employee Fair Entitlements Guarantee

Employee Fair Entitlements Guarantee

On 5 June 2015 the Australian Taxation Office (ATO) withdrew 3 previous interpretative decisions and issued 3 replacement interpretative decisions relating to the liability of a company in liquidation, and its liquidator, for the superannuation guarantee charge in respect of Fair Entitlements Guarantee (FEG) advances.

The FEG is a Commonwealth government payment scheme designed to assist and protect employees who are owed certain employee entitlements and have lost their jobs as a result of their employer entering into liquidation or becoming bankrupt.

The 3 former interpretative decisions (ATO ID 2008/25, ATO ID 2008/27 and ATO ID 2008/28) dealt with liability for the superannuation guarantee charge in respect of advances paid pursuant to the former payment scheme known as the General Employee Entitlements and Redundancy Scheme (GEERS) by third parties or a liquidator. GEERS was replaced by the FEG, which came into effect on 5 December 2012, and the FEG applies to all employer insolvency events that occurred on or after that date.

The new interpretative decisions published by the ATO in ATO ID 2015/13, ATO ID 2015/14 and ATO ID 2015/15 confirm:

  • Where the Department of Employment makes an FEG advance to a former employee of the company in liquidation through a third party provider (such as an accounting firm) rather than via the liquidator, the company is liquidation is liable for the Superannuation Guarantee Charge where the third party (e.g. the accounting firm) does not make sufficient superannuation contributions in respect of the FEG advance by the due date;
  • A company in liquidation will be liable for the Superannuation Guarantee Charge where the company’s liquidator has not made sufficient superannuation contributions by the relevant quarterly cut-off date in respect of an FEG advance to a former employee of the company; and
  • A liquidator will not be personally liable to pay the Superannuation Guarantee Charge if the liquidator does not make sufficient superannuation contributions by the due date in respect of an FEG advance paid to a former employee of the company. The liability remains with the company.

If you would like further information on the above matters, please contact Craig Shepherd or Anneliese Seymour at Murdoch Lawyers on (07) 4616 9898.

 

Prepared by Craig Shepherd

This publication has been carefully prepared, but it has been written in general terms and should be viewed as broad guidance only. It does not purport to be comprehensive or to render advice. No one should rely on the information contained in this publication without first obtaining professional advice relevant to their own specific situation.

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