Turnbull gov't takes further step to ensure employers pay workers’ superannuation entitlements

Sydney Employees — Commuters cast their shadows as they arrive at the Central Business District during the morning rush hour in Sydney July 1, 2013. Reuters/Daniel Munoz/File Photo

The Turnbull government announced on Tuesday additional package of reforms to give the Australian Taxation Office (ATO) near real-time visibility over superannuation guarantee (SG) compliance by employers. The ATO will be backed up with additional funding for a Superannuation Guarantee Taskforce intended to clean-up employer non-compliance.

The package builds on legislation to close a loophole utilised by some employers to short-change workers who make salary-sacrifice contributions to their superannuation. Minister for Revenue and Financial Services Kelly O’Dwyer said some employers not meeting their SG obligations has been an issue since 1992, when the SG was introduced.

O’Dwyer slammed this practice by unscrupulous employers, saying those that do not pay their workers’ superannuation entitlements on purpose are robbing their workers of their wages. The minister maintained that this is illegal and must never be tolerated.

“The Turnbull government is taking action to safeguard and modernise the SG so employers can’t hide from their legal duty,” O’Dwyer said in a media release. O’Dwyer also assured that the government is working to provide every Australian with the confidence that the superannuation system is working in their best interests.

The new package involves measures to require superannuation funds to report contributions obtained more frequently to the tax office. This will allow the ATO to spot non-compliance and perform the necessary action.

It also entails bringing payroll reporting into the 21st century through the rollout of Single Touch Payroll (STP). Businesses with 20 or more employees will transition to STP from July 2018, while smaller employers are set to come on board from July 2019. This will lessen the regulatory burden on business. It would also transform compliance by aligning payroll functions with regular reporting of taxation and superannuation obligations.

Furthermore, the package also includes improving the effectiveness of the ATO’s recovery powers. It is expected to strengthen director penalty notices and use of security bonds for high-risk employers to guarantee that unpaid superannuation is better collected by the tax office and go to employees’ super accounts.

It will also allow the ATO to seek court-ordered penalties in the most egregious cases of non-payment. These include employers who are repetitively getting caught but failing to pay superannuation guarantee liabilities.

The package reflects the main recommendations in the Final Report of the SG Cross-Agency Working Group. It was established by O’Dwyer late last year. The government didn’t accept the Working Group’s recommendations to soften penalties for non-compliant employers, according to a press release.