Employers could be sent to jail for not paying superannuation

Nest egg, superannuaiton, SMSF, retirement
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Employers who don’t pay Superannuation Guarantee could be sent to jail under changes to the law in a Bill passed through the Parliament.

The Treasury Laws Amendment (2018 Measures No. 4) Bill 2018 has passed both houses of Parliament and awaits Royal Assent. It allows for the ATO to direct employers to pay Super Guarantee, with failing to obey being a crime punishable by up to 12 months jail, or a fine.

Assistant Treasurer Stuart Robert said that the legislation was the “most comprehensive action any Government has taken to address non-compliance with superannuation guarantee law since its introduction in 1992”.

“In cases where employers defy directions to pay their superannuation guarantee liabilities, the ATO can now for the first time apply for court-ordered penalties, including up to 12 months’ imprisonment,” he said.

“Employers should know the ATO will be able to closely monitor superannuation compliance, and employers will face severe consequences for ripping off their workers.”

At the same time as the Coalition is enacting jail time for not paying Super Guarantee, it also has another Bill which gives amnesty for employers not paying super in the Senate.

The Bill almost passed the Parliament late last year, but it was amended by the Government and so had to return to the House for another vote.

Though having enough support to pass, jail sentences for Super Guarantee underpayment has been criticised from some sectors. The Tax Institute said the measure was “not justifiable”, instead calling for changes to the Super Guarantee rules.

The soon-to-be Act also extends Single Touch Payroll to smaller employers – those with under 20 employees – amongst other measures.

Reversionary TRIS pensions and conditions of release

The Bill also includes a change to reversionary Transition to Retirement Income Streams (TRIS).

Currently, as noted in the Explanatory Memorandum (EM) to the Bill, TRISs can only revert to a dependent beneficiary if the beneficiary has met one of the relevant conditions of release. This is due to the interaction of the definition of ‘retirement phase’ with other regulations.

The soon-to-be Act includes a change so that a “reversionary TRISs can always be paid to a reversionary beneficiary, irrespective of whether they have satisfied a condition of release,” according to the EM.

“The change will allow a reversionary TRIS to be paid to a dependant beneficiary rather than having to be commuted and a new income stream started from the deceased member’s underlying superannuation interests.”

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