ATO labels ISA claims ‘over-stated’ and unreliable

The Australian Taxation Office (ATO) has strongly challenged the reliability of Industry Super Australia (ISA) analysis seeking to highlight the underpayment or non-payment of superannuation guarantee (SG) contributions by employers.

The ATO said it believed the methodology use by the industry funds substantially over-stated the prevalence of SG underpayments.

The ATO's position is significant because the ISA's research and lobbying around SG under-payments was the catalyst for the Senate Economic Committee inquiry and calls for tougher legislative and regulatory action.

The ATO has used its submission to the Senate Economics Committee inquiry into the non-payment of the SG to acknowledge shortcomings in its ability to track non-payment of SG contributions but made clear it did not regard the ISA research as "reliable".

"We do not consider the number of people identified with an amount of SG underpayment in the ISA report to be reliable as the report uses ‘averages' to reach a specific estimate, rather than an estimate expressed within a ‘range'," the ATO submission said.

"The ATO considers that the ‘tolerance threshold' used to determine the 2.15 million people reported with an apparent SG underpayment in the report is too high. The report used a tolerance threshold of 8.5 per cent across the entire population."

"A ‘tolerance threshold' is an adjustment to the rate of superannuation on the salary or wage figure to account for the fact that salary or wages reported may exceed ordinary time earnings (OTE) (because of aspects such as overtime, allowances, etc.)," the ATO submission said.

"We therefore believe the adjustments for OTE used in the report are insufficient to account for the differences seen with employment models and work practices across various broad industries. This means the report substantially overstates the prevalence of SG underpayments."

"While the use of the so called two per cent sample data file from the ATO is a valid methodological approach, the ATO does not consider that the data is sufficiently reliable to construct a targeted audit program," it said.