The Government has released draft legislation aimed at cracking down on Superannuation Guarantee underpayment.
A draft of the Treasury Laws Amendment (Taxation and Superannuation Guarantee Integrity Measures) Bill 2018 has been released for consultation.
If the draft Bill is passed the ATO would have the power to disclose information to an employee about a failure, or suspected failure, by an employer to comply with their Super Guarantee obligations.
The Bill would also give the ATO the power to issue a direction to an employer to pay unpaid and overdue Superannuation Guarantee, or to undertake an approved education course on the SG obligations. Changes are also made to director penalties, including the ‘lock-down rule’.
Under the draft legislation, Single Touch Payroll reporting would be required for small employers from 1 July 2019. All employers would also be required to report salary sacrificed amounts to the ATO, through Single Touch Payroll.
The Government has legislation before the Parliament to stop employers claiming salary sacrifice amounts against their SG obligations. This Bill appears to be stalled in the Senate, as it also includes changes to super choice rules. However the explanatory material to the draft Bill refers to the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Act 2017 as passed, suggesting the Government is confident of getting the votes.
“The expansion of mandatory and real time reporting of employer liabilities to all employers is designed to improve the Commissioner’s ability to monitor superannuation guarantee compliance by increasing the visibility of non-payments by all employers,” says the Explanatory Material.
Many of these change follow from the Superannuation Guarantee Cross-Agency Working Group.
The Government had intended to wind-back some of the penalties around Super Guarantee, but these were dropped in MYEFO.
Submissions on the draft legislation are due by 16 February 2018.
Industry welcomes reforms, but need to go further
Industry Super Australia said the draft legislation could help more than three million Australians who are “short changed” on their superannuation, but that it also lacks some key measures.
ISA public affairs director Matt Linden said extending Single Touch Payroll to all employers would make it much easier to identify underpayment of SG, but argued the laws needed to go further.
“In not aligning compulsory superannuation payments with regular wage cycles, these laws fall seriously short of protecting worker interests,” he said.
“A four month delay from when a super entitlement appears on a payslip to when an employer has to pay it to an employee’s fund is at odds with our digital world.”
The Australian Institute of Superannuation Trustees (AIST) also welcomed the draft legislation, saying it shifted the burden for monitoring SG compliance from individuals to the ATO and “dramatically” improved the tax office’s ability to get real time information.
“Extending single touch payroll to all employers should significantly improve the integrity of the super system and help tackle Australia’s 2.8 billion dollar unpaid super problem,” said AIST CEO Eva Scheerlinck.
“We know that the problem of non-compliance is greatest among small businesses, so it is very important that the ATO has all the available tools at its disposal to closely monitor this sector.”
But Ms Scheerlinck said further measures were still needed to tackle unpaid and lost super, such as aligning payment of SG with pay slip reporting cycles and removing the $450 monthly threshold for SG.