Employers face harsher penalties for failing to pay super

The Australian Tax Office will crack down on employers who fail to pay employees’ superannuation contributions, with small and micro businesses identified as the worst offenders in a recent review.


Inspector-general of taxation Ali Noroozi conducted a review of the superannuation system, which found a number of employers are failing to comply with their obligations.


According to the review, 95% of collectable debt under the superannuation guarantee charge is connected with micro business and SME enterprises.


Noroozi said in the review that employees most at risk of being denied super payments are those working in small businesses as well as contracted, casual and younger workers.


Industries to be targeted under the changes include hospitality, arts and recreation and agriculture.


Under the new regime, the ATO will collect employee information from employers including the amount of super payments.


Employers will have to include the amount of super on employee’s pay slips, and super funds will have to notify employees if their payments stop within a quarter.


The government will also extend the director penalty regime to make directors liable for outstanding superannuation liabilities.


In addition to the above points, Noroozi made these recommendations to the ATO:

  • The ATO should track and value unpaid super by collecting and analysing information and data.
  • The ATO should monitor and rapidly follow up compliance by high-risk employers, particularly micro businesses by capturing employee details on a quarterly basis.
  • The ATO should significantly expand its proactive super audit work to check high-risk employers.
  • The ATO should report on the number of employee complaints on missing super.
  • The government should consider giving the ATO greater prosecution powers such as the ability to seek the imposition of civil pecuniary powers.

The Association of Superannuation Funds of Australia wants employers to report to the ATO on a monthly rather than a quarterly basis.


According to chief executive Pauline Vamos, small businesses are the worst offenders because they often don’t have the systems capability or the resources to hire superannuation experts, resulting in unintentional non-compliance.


Neil Howard, senior manager at chartered accounting firm HLB Mann Judd, told The Australian Financial Review superannuation payments are one of the first liabilities to go unpaid when a company is struggling financially.


“In times of cashflow tightness, ‘what does it matter if it’s a few days late’ is the attitude that a lot of employees take,” Howard said.


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