Superannuation Guarantee review and reforms

The  Inspector-General of Taxation’s Review into the ATO administration of the Superannuation Guarantee Charge (the Review) was released this week.

The Review examined the ATO’s administration of the Superannuation Guarantee (SG) charge, including the level of non-payment of workers’ superannuation entitlements, the ATO’s non-compliance detection mechanisms and how the ATO manage non-compliance cases after they are detected.

The Review found that the SG system works well for the majority of Australians. However, those most at risk of not receiving their superannuation entitlements are employees who are least empowered, being predominately low paid, casual and young workers.

In his report the Inspector-General makes 12 recommendations in respect of the superannuation guarantee system. Of the seven recommendations and three part recommendations directed to the ATO they have agreed with nine and disagreed with one.  The remaining recommendations were directed to Government.

Through the superannuation measures contained in the Protecting Workers’ Entitlements reforms, employees will receive:

  • Information on their payslips about the amount of superannuation actually paid to their account (Recommendation 2)
  • Quarterly notification from their superannuation fund if regular payments cease (in line with Recommendation 3).

Providing employees with more timely information on their superannuation will also assist in reducing the timeframes between when a SG shortfall arises and when an employee lodges a complaint with the ATO.

The Government will shortly commence consultations with the superannuation industry, employer representatives and unions about the implementation of these measures.

The Government is also extending the director penalty regime to cover unpaid SG charge (part of Recommendation 11).  The Inspector-General was of the view that if a company fails and owes superannuation to employees, then the directors of the company should be made strictly liable for the unpaid superannuation liabilities of the company.  This will act as a strong deterrent against employers not paying superannuation and also discourage phoenix practices.

From press release by Bill Shorten – Minister for Financial Services and Superannuation