Government Acting on Super Guarantee Non-Compliance

The government has established a new multi-agency working group (chaired by the ATO and comprising senior representatives from the Treasury, the Department of Employment, ASIC and APRA) to investigate and develop practical recommendations to deal with superannuation guarantee non-compliance.

The working group will identify the drivers of non-compliance, develop way to improve compliance, and develop policy options to ensure the law remains fit for purpo9se for Australia’s $2 trillion superannuation system.

The working group is due to provide a final report to the Minister for Revenue and Financial Service in March 2017, which will provide options to improve Superannuation Guarantee compliance to ensure employees get the superannuation they are legally entitled to.

The government is also continuing its work with the ATO to protect employees from being ripped off by preventing the practice of deliberately liquidating a company to avoid paying creditors, including employee entitlements, through the Serious Financial Crimes Taskforce and the Phoenixing Taskforce.

Ref: Minister for Revenue and Financial Service’s Media Release, 25 January 2017

Editor: The ATO also provided some information about Superannuation Guarantee (SG) non-compliance in its recent submission to the Senate Economics References Committee inquiry into the impact of the non-payment of the Superannuation Guarantee.

In addition to marketing and education activities to re-enforce the need for employers to meet their SG obligations, the ATO conducts audits and reviews to ascertain SG non-compliance, with 70% of cases stemming from employee notifications (the remaining 30% of cases are actioned from ATO-initiated strategies).   

On average, the ATO receives reports from employees which relate to approximately 15,000 employers each year. These reports are subsequently investigated by the ATO, although the ATO finds that nearly 30% of these employers have in fact paid the required SG to their employee.

However, an SG shortfall is identified in the 21,000 audits that addressed SG compliance, and this action resulted in $670.4 million superannuation guarantee charge (SGC) raised (including penalties and interest) with $341.3 million SGC collected by the ATO.

From an industry analysis perspective, the top four industries from which reports are received by the ATO are from:

  • Accommodation and Food Services;
  • Construction;
  • Manufacturing; and
  • Retail Trade.

These four industries represent approximately 50% of the audits and reviews undertaken.

Reports of non-payment of SG from these industries usually are made 1 to 3 years after the due date for the first period about which they are seeking assistance.

The ATO also noted that the proposed Singe Touch Payroll (STP) will help overcome certain limitations in the data currently provided to the ATO (as well as simplify taxation and superannuation interactions for employers, by aligning the reporting and payment of PAYG withholding and SG with a business’s natural process of payment their employees).

Use of STP is mandated for businesses with 20 or more employees from 1 July 2018, and a pilot program will be undertaken in 2017 to identify the nature of benefits of STP for small businesses.

A decision by government, on any expansion for STP reporting for small business employers is expected after the pilot is completed.

Ref: ATO Submission to the Senate Economics References Committee inquiry into the impact of the non-payment of the Superannuation Guarentee.

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