Employer super issues
New laws to improve SG compliance
A number of measures have been enacted in an effort to protect the super entitlements of employees. These measures are focused on improving employers' compliance with their SG obligations by providing more education, strengthening enforcement and increasing visibility.
Payment direction powers
From 1 April 2019, the Taxation Administration Act 1953 has been amended to allow the ATO to direct an employer to pay unpaid and overdue SGC liabilities. An employer has at least 21 days to pay the liability (or longer if the ATO believes it is appropriate).
If the employer does not pay the liability within the time specified by the ATO, the employer is subject to 50 penalty units ($10,500), imprisonment for 12 months, or both. Business owners/directors may be held personally liable for amounts owing through Director Penalty Notices and security deposits.
Directions by the ATO to employers will apply in relation to SGC or an estimate of SGC that first becomes payable on or after 1 July 2018. It is intended that the ATO only issue directions in relation to serious contraventions where the employer has shown ongoing and intentional disregard of their SG obligations.
From 1 April 2019, the Taxation Administration Act 1953 (TAA) has been amended to allow the ATO to direct employers who are not meeting their SG obligations to complete a new, free, 2 hour online education course (and assessment) SG employer obligations course.
It is expected that an education direction would commonly be issued to an employer where the employer's lack of knowledge or understanding of their obligations has contributed to a failure to comply with their obligations under the Superannuation Guarantee Administration Act (SGAA) or the TAA. Failures to comply with these laws would include an employer's failure to:
- pay the amount of SGC that is payable
- pay a liability arising from an estimate the ATO makes of an unpaid SGC
- lodge an SG statement for the quarter on or before the 'lodgment day'
- provide the ATO with any information that is requested-comply with an obligation to keep records as required under the SGAA
- comply with any other obligation under the TAA that relates to the SGAA.
An employer who fails to comply with the education direction within the specified time period is liable to an administrative penalty of $1,050 (5 penalty units) and fines as follows:
- first offence: $4,200 (20 penalty units)
- second offence: $8,400 (40 penalty units)
- third or subsequent offences: $10,500 (50 penalty units) and/or imprisonment of 12 months
Education directions will apply in relation to a failure to comply with an SG obligation that occurs on or after 1 July 2018. This includes a failure to pay an amount of SGC or an estimate of an SGC that became payable before 1 July 2018 and remains payable on or after 1 July 2018.
Employers who feel they could benefit from more knowledge in relation to their super obligation may also voluntarily complete the course at a time that suits them.
From 1 April 2019, the TAA 1953 has been amended to allow the ATO to provide employees with information regarding the non-payment of SG by employers, including what actions the ATO is taking to recover the outstanding amounts.
These amendments apply to records and disclosures made on or after 1 July 2018 (regardless of whether the failure or suspected failure to comply with the obligation occurred before, on or after 1 July 2018. The amendments allow the ATO to disclose historical information relating to the potential effected employee which can impact on their superannuation entitlements.
|Example: Disclosure of non-payment of SG
Jo, a taxation officer, has been reviewing data received from a number of superannuation funds. She notices a mismatch in the employer contributions for a number of GCorp's employees compared to other data received in relation to GCorp's payroll. Jo suspects that GCorp may have stopped paying SG for its employees but not lodged SGC statements.
Jo notifies the employees of GCorp that the Commissioner suspects there is unpaid SGC relating to them. Jo issues a default assessment to GCorp in respect of the unpaid liability of SGC and then issues a director penalty notice to the directors for the unpaid liability.
Under the amendments, Jo is able to contact GCorp's employees about GCorp's possible failure to comply with its obligations under the SGAA, but only to the extent the disclosure relates to the particular employee's entitlements. Jo is also able to disclose that the Commissioner has issued to GCorp a default assessment and director penalty notice in respect of the unpaid superannuation liability to recover that particular employee's entitlements.
Source: Explanatory Memorandum, Treasury Laws Amendment (2018 Measures No. 4) Act 2019 .
Last modified: Wednesday, July 24, 2019