ATO given increased powers to enforce employer superannuation obligations

People walking to work

The ATO recently announced that the Superannuation Guarantee gap – the difference between what employers should be paying employees and what they actually are paying – was $2.85 billion for the 2014-15 financial year. Reports also suggested that the majority of businesses responsible for not meeting their obligations were small-medium sized businesses.

Under new federal legislation announced at the end of August 2017, the ATO will receive increased funding to help them identify businesses that are failing to meet their obligations. This new legislation, announced by Minister for Revenue and Financial Services Kelly O’Dwyer, will also require super funds to report to the ATO more regularly.

Ms Dwyer said that “the Turnbull Government is taking action to safeguard and modernise the SG so employers can’t hide from their legal duty. We will give all Australians confidence that the superannuation system is working in their best interests.”

The ATO currently has 150 full-time staff focusing on superannuation guarantee work. This number is expected to increase under the new legislation, giving the ATO more ability to identify employers who are failing to do the right thing.

As mentioned above, the ATO said that most of the businesses not meeting their obligations were small-medium businesses, and in particular, construction, retail, food services and accommodation businesses – all of which may come under increased scrutiny this financial year.

James O’Halloran, ATO deputy commissioner for superannuation, said that “Any level of non-compliance is of concern given the impact it has on employees. If we find there has been intentional disregard, we will apply penalties and take people to court as necessary.”

New legislative measures

The package announced by the government includes measures that:

  • Require Super funds to report contributions received to the ATO at least monthly, to help the ATO identify non-compliance promptly.
  • Roll out Single Touch Payroll (STP) – a new system that will take effect from 1 July 2018 for employers with 20 or more employees, with smaller businesses transitioning from 1 July 2019. STP is designed to ensure employers report on salaries, PAYG and Superannuation at the same time as they pay employees.
  • Increase the ATOs recovery powers by strengthening director penalty notices and using security bonds for high-risk employers to help the ATO collect unpaid superannuation more effectively.
  • Allow the ATO to seek court-ordered penalties for flagrant breach of obligations, for example, employers who consistently fail to pay superannuation.

If you’d like more information about the changes, or need some help meeting your superannuation obligations, please feel free to call us on 07 3822 7201 to discuss your situation.