ATO plans crackdown on super-dodging micro employers

The Australian Taxation Office is expecting 12,500 complaints this year about micro employers failing to pay employees’ superannuation, amid proposed laws to crack down on the issue.

It’s been revealed the ATO receives around 18,000 complaints a year about unpaid super, about 70% of which relate to micro enterprises; businesses turning over less than $2 million a year.

In 2011, the ATO pursued 10,000 cases involving micro employers failing to pay superannuation, reclaiming $152 million as a result.

This year, the tax office expects to handle 12,500 complaints about micro employers failing to pay employees’ superannuation. The issue is listed among its compliance focus areas.

Despite difficult market conditions – namely in retail and manufacturing – employers are being urged not to defer superannuation payments due to the huge penalties and looming new laws.

Businesses that fail to pay employees’ super by 28 days after the end of a quarter must pay interest on the missed payments in addition to an administration fee.

“You have to pay super guarantee contributions for each eligible worker at least four times a year,” an ATO spokesperson says.

“If you haven’t met your super obligations as an employer, you have to lodge a Superannuation guarantee statement – quarterly and pay a super guarantee to us.”

“The super guarantee is made up of the super guarantee shortfall amounts, interest at 10% per annum, and an administration fee of $20 per worker per quarter.”

“Also, your business will lose the tax deduction it would normally get. Late super contributions and the super guarantee charge are not tax deductible.”

The price of non-compliance could soon be even greater, with the government intending to push ahead with proposed laws that make directors personally liable for a company’s unpaid super.

The legislation is aimed at tackling phoenix companies – failed businesses with debts to creditors and employees that are resurrected by the same operators under a slightly different guise.

However, when the proposed laws were unveiled late last year, concerns were raised that they might unfairly penalise directors who had inadvertently missed a payment.

According to Assistant Treasurer Mark Arbib, the government is refining the legislation.

“We will be undertaking further public consultation shortly before the legislation is reintroduced into Parliament,” Arbib told The Sydney Morning Herald.

It comes as the high dollar Australian and low consumer confidence take their toll, with 2,589 companies entering administration in the three months to December, up 8% on the year before.

This article first appeared on StartupSmart.