The financial services and superannuation industries have largely welcomed the government’s reforms to lift superannuation guarantee (SG) compliance and to increase funding for the Australian Taxation Office’s SG taskforce.
The Minister for Revenue and Financial Services, Kelly O’Dwyer, said employers’ failure to meet their SG obligations to their employees had been a problem ever since it was introduced in 1992.
“Employers who deliberately do not pay their workers’ superannuation entitlements are robbing their workers of their wages. This is illegal and won’t be tolerated,” she said.
The reform packages included measures to:
- Require super funds to report contributions received more frequently, at least monthly, to the ATO. This would enable the ATO to identify non-compliance and take prompt action;
- The Single Touch Payroll (STP) rollout;
- Improve the effectiveness of the ATO’s recovery powers; and
- Give the ATO the ability to seek court-ordered penalties in the most egregious cases of non-payment.
The Association of Superannuation Funds of Australia (ASFA) welcomed the measures but said more could still be done to improve SG compliance.
ASFA chief executive, Dr Martin Fahy, said: While increased compliance activity by the ATO will mean fewer workers will be short changed by unscrupulous employers, there will remain cases where a company goes into liquidation and there are no assets available to pay the entitlements of workers”.
“As is the case with unpaid wages, there is a role for government to step in and assist with the payment of superannuation entitlements,” he said.
Also welcoming the measures, industry super fund Cbus said the most urgent priority was for the Government to legislate to align payment of super with wages.
Cbus chief executive, David Atkin, said unpaid super was a big problem that required a big response from Government and regulators.
“Workers superannuation is not an ATM that can be used by companies short of cash, it’s deferred wages for someone’s future,” Atkins said.
“We know that paying super with wages will go a long way in stopping non-payment – it’s common sense and reflects community expectations.
“By the ATO Commissioner’s own admission of the scale of the problem, the antiquated quarterly payment system isn’t working for workers or businesses.”
Industry Super Australia’s (ISA’s) public affairs director, Matt Linden, called for the government to urgently reconsider the 25-year-old laws that allowed employers to use employees’ super for business cash flows and ultimately not pay the money at all.
“With a compliance regime that is highly dependent on employee complaints and employer self-reporting it is no surprise billions in unpaid super is going unchecked,” he said.
“With more than 80 per cent of unpaid super going undetected, rogue employers know the chances of getting caught are slim.”
The Financial Services Council (FSC) also welcomed the reforms and said the taskforce would provide important protections to consumers and help reduce the estimated $2.85 billion in unpaid SG payments.
The SMSF Association said it welcomed the fact that the Government was building on the integrity measures that were already announced that removed loopholes around salary sacrifice contributions and employer SG obligations.
The SMSF Association’s chief executive, John Maroney, said: “It’s the Association opinion that measures such as the frequent reporting of SG contributions, Single Touch Payroll, and increased ATO powers will help lower this $2.8 billion in missing superannuation payments”.
