SMEs have wait ahead on default super decision as non-payments issue continues to bubble


The small business community is indicating a preference to keep things as they are when it comes to nominating super funds for workers, as issues of non-payments of superannuation continue to bubble away in the background.

Fairfax reports a recent survey by Cameron Research Group into distributing default super suggest 84% of SMEs surveyed prefer the current model, by which super funds are nominated in workplace awards and workers have an at times limit scope to make a choice of fund outside of this.

While the Productivity Commission and the tax office continue to dig into Australia’s superannuation system, both in terms of its competitiveness and non-compliance around paying workers superannuation guarantee contributions, the small business community continues to call for simplicity in the sector.

Submissions are currently open for the third stage of the Productivity Commission’s review into the nation’s retirement savings system, with the commission asking the public to weigh in on how a body would be formulated to choose default super products to avoid risks of “politicisation and bias” if a new format was put in place.

It may be some time before small business employers know whether processes for staff selecting super funds will change, with submissions for the third stage of the review closing on August 21, and a final report to be delivered in June 2018.

Meanwhile, small business owners who are failing to comply with required super payments continue to be in the spotlight, with experts suggesting more still needs to be done to track and deliver unpaid super.

This issue was raised at the annual Colloquium of Superannuation Researchers Symposium earlier this month, when special adviser to Industry Super Australia Phil Gallagher highlighted billions were going missing each year.

In May, Inspector-General of Taxation Ali Noroozi raised the possibility of random audits of businesses to ensure super entitlements were being correctly paid.

“It should be noted that, in the long term, random audits may also lead to better targeting of non-compliant taxpayers,” he said.

Small Business and Family Enterprise Ombudsman Kate Carnell has previously told SmartCompany SMEs not paying super should expect to receive a knock on the door from the tax office eventually.

“To start with, it’s not fair to employees, it’s their money,” Carnell said in May.

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4 years ago

Confusion caused by Superfunds is a bigger contributor to the non payment of super than any other factor.

The soon to be implemented Single Touch Payroll has in its design two
factors that will help any perceived “employer” problem with managing
their Super Guarantee obligations. Each PayEvent will report the amount
of Super Guarantee obligation that has been accrued for each employee so
far for the payroll year. In this way the ATO will finally have
visibility of whether an employer is accruing super and eventually be
able to clarify whether they should be accruing super. The second
factor is the reporting of the actual payment of the super by the
employer. The design of this reporting is still in discussion. The aim
is that the ATO will now have visibility of whether the employer is
paying their super and will then follow up those employers that aren’t.
In theory problem solved. In practice problem at least managed.

One of the design models being discussed, made public at the recent
Single Touch Payroll and Super Industry Engagement Forum, is that the
Superfunds themselves will report the receipt of payment for each
employee back to the ATO. On one hand this achieves the purpose –
visibility of payments to the ATO. On the other hand this places the
funds in an interesting position. In our view it CANNOT and MUST NOT
empower the superfunds to put even more pressure on the employers to pay
earlier or in any different cycle or manner than is the current legal
obligations, (i.e., once per quarter unless awards or employment
agreements state otherwise).

We do not accept that Superfunds can bury clauses about earlier or
more regular payments into Product Disclosure Statements or similar and
then use that same fine print to then threaten the employers.

Call Out

Superfunds, get on board with SuperStream gateways as your
only means of receiving super payments. This is simple for employers and
employers will be somewhat more content with keeping it simple.

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