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Do not pass go….Criminal penalties for superannuation underpayments

Criminal penalties for superannuation underpayments

Daniel Hodgson and Hayley Lock discuss the Government’s draft legislation to strengthen the integrity of the superannuation system.


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On 24 January 2018, the Federal Government released Exposure Draft (ED) Treasury Laws Amendment (Taxation and Superannuation Guarantee Integrity Measures) Bill 2018 to strengthen the integrity of the system for mandatory employer superannuation contributions (SG). If enacted, the draft legislation would provide the Australian Taxation Office (ATO) with additional powers, including:

  • Directing employers who fail to meet their SG obligations to undertake SG education courses,
  • Directing employers to pay overdue SG liabilities, with new criminal penalties for failure to comply with such a direction,
  • Disclosing information to workers about actual or suspected failure by their employer to meet its SG obligations, and the action that the ATO is taking in relation to the situation.

Employers should particularly take note of the third item. Under the proposed legislation, if an employee made a complaint to the ATO about his/her employer failing to make the required superannuation contributions, the ATO could now take the lead in communications with other employees who might be similarly affected.

The ED also includes proposed changes to the single touch payroll (STP) reporting rules relating to superannuation contributions. These changes would require employers to report through STP on any amounts that an employee salary sacrifices in return for additional employer superannuation contributions. The purpose of this change is two-fold. First, it addresses the requirements of the reportable employer superannuation contribution (RESC) provisions and secondly, it will allow the ATO to monitor employers' compliance with other proposed integrity measures. Those proposed measures include removing salary sacrifice contributions from the assessment of whether the employer has met its SG obligation.

The ED also makes clear that employers are not required to report actual superannuation contributions through STP – this obligation will fall on the receiving fund. There appear to be some other areas where the ED differs from the STP parameters that the ATO has previously shared with employers and payroll software providers. However, there is the opportunity for these to be resolved through the consultation process on the ED.

These proposals are indicative of the increased focus that Government is placing on businesses’ compliance. Coupled with the real-time data that STP will make available to the ATO, this presents a strong case to employers to thoroughly review their processes and practices in relation to SG.

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