The Federal Government has declared it will close off the loophole which allows unscrupulous employers to use employees’ superannuation salary sacrifice amounts to meet their company’s superannuation guarantee obligation but have fallen far short of the demands of the industry funds.
The loophole was highlighted by the industry superannuation funds last year and the Minister for Revenue and Financial Services, Kelly O’Dwyer announced on Friday that the Government would be amending the legislation to close it off.
She said that the employers guilty of using the loophole were acting unscrupulously and claimed the Government was acting “very swiftly” to close it down.
The Minister also signalled the Government was inclined to retain the Superannuation Guarantee Cross-Agency Working Group involving the Australian Taxation Office (ATO), the Treasury, the Department of Employment, the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA).
However, Industry Super Australia (ISA) representative, Matt Linden said the Government was not going far enough in circumstances where some employers were paying no superannuation guarantee at all.
At the same time, Australian Institute of Superannuation Trustees (AIST) senior policy manager, David Haynes said the industry had been calling for the closing of the loophole for years.
“For too long an anomaly in the super system has allowed some employers to short-change their employees who salary sacrifice,” Haynes said. “Closing this loophole will improve the integrity of the super system and potentially add thousands of dollars each year to the super balances of those affected.”
The Financial Services Council also welcomed the Government’s move, with chief executive, Sally Loane saying it would protect consumers who were being short-changed by their employers.