The Turnbull Government is acting to ensure that all Australian employees are being paid their rightful superannuation entitlements.
On the 24 May 2018, the Turnbull Government introduced legislation to complement the Superannuation Guarantee (SG) Integrity Package by presenting a one-off, twelfth-month amnesty for the historical underpayment of superannuation to Australian workers. The ATO estimates that in 2014-15 around $2.85 billion in SG payments went unpaid.
The Bill encourages employers to come forward and correct their wrong doings by paying any outstanding superannuation in full.
Employers will not be let “off the hook” per say. To use the amnesty, they must pay all unpaid superannuation in full, as well as the high rate of nominal interest. The amnesty will ensure that outstanding employee entitlements are secured by setting aside other penalties for late payment that are normally paid to the Government by employers.
If employers do not take advantage of this one-off amnesty, they will face higher penalties when they are caught. In general, a minimum 50 per cent on top of the SG charge they already owe. Additionally, the ATO will continue to enforce the usual charges against employers for those historical obligations they fail to own up to voluntarily.
Further, the announcement builds on the Government’s package of reforms to protect workers’ superannuation entitlements by:
- Providing the ATO with the ability to seek court-ordered penalties in cases where employers forgo instructions to pay their SG liabilities, including up to 12 months jail time in the most serious of cases;
- Requiring superannuation funds to report contributions received at least monthly to the ATO, in order to identify non-compliance and take prompt action;
- Introducing Single Touch Payroll (STP) to reduce the regulatory burden on businesses and transform compliance by aligning payroll functions with regular reporting of taxation and superannuation obligations. As of July 1 2018, employers with 20 or more employees had to transition to STP and from 1 July 2019, smaller employers will be coming on board; and
- Improving the ATO’s recovery powers by strengthening Director Penalty Notices and using security bonds for high-risk employers, to ensure that unpaid superannuation is more effectively collected by the ATO and thus, paid to employees’ super accounts.
Collectively, these initiatives reflect the Turnbull’s ongoing effort to achieve to a fair and sustainable superannuation system that delivers for all Australian workers.
If you have any questions on non-payment of worker’ superannuation, please contact your MPT Group Accountants & Advisors Superannuation expert.