ATO reports false negatives for SG underpayment

The Australian Taxation Office’s (ATO’s) apparent superannuation guarantee (SG) underpayment rate by gender shows a higher proposition of false negatives for women, according to a paper.

Industry Super Australia’s (ISA’s) special adviser, Phil Gallagher’s paper examined unpaid super and pointed to ISA’s estimates of the ATO’s two per cent sample file of matched personal tax and superannuation records for 2013/14.

The ATO’s data found that the underpayment of superannuation of males was at 35 per cent, and 29 per cent for females, using the 8.5 per cent cut off.

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“The gender difference may be because males are more likely to work in construction occupations and as consultants – two areas of known underpayment.  The adjustment of part-time wages for overtime could be a factor decreasing the apparent female rate,” he said.

“That is, we strongly suspect that there are a higher proportion of false negatives for women because part-time wages are ordinary time earnings. 

“The adjustment is in place because the ABS [Australian Bureau of Statistics] Income Survey data show that full-time wages can occur at most income levels. This interpretation of a false negative bias for women is reinforced by the lower gender differences at seven per cent and 9.25 per cent.”

The ATO data showed the proportion of people under seven per cent SG was at 18 per cent for women and 22 per cent for men, and under 9.25 per cent 48 per cent for women and 45 per cent for men.

Gallagher also found that workers under 30 were more likely to have SG apparently under payed with a 40 per cent rate for 20-to-24-year-olds, and 35 per cent for 25-to-29-year-olds. Workers with taxable incomes below $37,000 were also more likely to be under payed the SG.

“So the evidence from the ATO file suggests that younger, lower skilled, lower income and terminating project workers are more likely to be underpaid their employer superannuation,” Gallagher said.

He also pointed to the Senate Economics References Committee’s criticism of the ATO’s failure to estimate SG non-payment.

The Senate report said: “During the course of this inquiry it became apparent to the committee that due to various data gaps, it is difficult to precisely estimate the extent of non-payment of SG in Australia”.

“Although critical of the estimate put forward by Industry Super Australia, the ATO was unable to provide the committee with an alternative figure. The committee is surprised at the ATO's apparent reluctance to engage with the issue of producing an SG gap, particularly as the matter has been raised in numerous reviews dating back to 2010,” it said.

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