The Turnbull government will move to increase penalties on the non-payment of superannuation guarantee payments with new legislation introduced to Parliament on Wednesday.
Unpaid superannuation entitlements was identified as an issue late in 2016 with the Australian Taxation Office putting the figure at $2.85 billion in unpaid superannuation each year.
Research by Industry Super Australia and Cbus put the figure even higher, claiming a shortfall of $5.6 billion in 2013/4 that affected almost three million, or 32 per cent of super-entitled workers, at an average of $2,025 each.
“It is not acceptable for employers to cheat staff out of their superannuation entitlements. To combat this I introduced legislation today that will allow the Australian Taxation Office to increase penalties on unscrupulous employers,” Revenue and Financial Services Minister, Kelly O’Dwyer told Parliament when introducing the bills.
The bill will boost the protection of workers’ superannuation entitlements by modernising the enforcement of the superannuation guarantee, she said.
“This bill introduces very serious consequences for employers who break the law by short changing their employees. The ATO will have access to new enforcement and collection provisions, including strengthened arrangements for director penalty notices,” Ms O’Dwyer said.
“In cases where employers defy directions to pay their superannuation guarantee liabilities, the ATO will be able to apply for court ordered penalties, including up to 12 months imprisonment,” she said.
The Bill – Treasury Laws Amendment (2018 Measures No.4) Bill 2018 – will also extend Single Touch Payroll to cover all but the smallest employers from 1 July 2019, which will modernise payroll reporting.
The Single Touch Payroll system will provide the Tax Office with current information about the amounts of superannuation that employers owe their employees.
“Separate to this Bill, reforms are already in train to ensure that from 1 July 2018 the ATO will receive near-real time information from superannuation funds about contributions they receive. Combined, these measures provide the ATO with timely information enabling it to detect superannuation non-compliance earlier and conduct proactive prevention of non-payment.
In addition the Government already has legislation before Parliament to close a loophole, to stop unscrupulous employers short changing superannuation contributions for employees who use salary sacrifice arrangements.
The Bill will enable the transition to retirement income stream of a superannuation fund member to be paid at death to their eligible dependants without having to be commuted and a new income stream started. Administrative processes will be simplified for bereaved beneficiaries at the time of a member’s death.
Amendments also eliminate double taxation in respect of deferred annuities purchased by superannuation funds and retirement savings accounts so that the fund or RSA can meet a liability to pay a deferred superannuation income stream.
Industry Super Australia has said the reforms will not fully address unpaid super and called for widening of the super guarantee.
Currently only those earning $450 or more from one employer must be paid the super guarantee. “This limit should be scrapped as its not necessary in the current environment,” said Matt Linden, ISA’s public affairs spokesman.
“The limit hits women hard with 42 per cent of women earning less than $450 a month from one employer not receiving super,” Mr Linden said.
In other legislation before Parliament, the loophole that allows unscrupulous employers to substitute voluntary salary sacrifice contributions for their own mandated super guarantee commitments will be closed.
Reforms also enable the transition to retirement income stream of a superannuation fund member to be paid at death to their eligible dependants without having to be commuted and a new income stream started. Administrative processes will be simplified for bereaved beneficiaries at the time of a member’s death.