Bosses failing to pay super as hefty penalties loom

The Australian, June 18, 2018

The number of bosses failing to pay employees superannuation has increased by more than 50 per cent over the past year — ­breaches that are soon to carry penalties of up to a year in jail for employers.

There has also been a marked increase in the number of workers dobbing in their bosses for underpayment or non-payment of super entitlements, according to confidential Australian Taxation Office data supplied to a Senate inquiry.

The Senate economics committee is currently examining government budget proposals that give bosses an amnesty of 12 months to pay overdue or unpaid super entitlements to their workers.

The number of companies facing worker complaints to the ATO about non-payment jumped 57 per cent over the past financial year to nearly 13,000.

Meanwhile, the number of employers forced to lodge a superannuation shortfall statement after failing to pay the required amount on time surged 60 per cent to nearly 18,000 companies over the past financial year.

Small businesses are the usual culprits.

The tax office has estimated that between 2 and 11 per cent of businesses fail to pay super each year.

The tax office estimates workers are missing about $2.85 billion in super each year, while Industry Super Australia believes it is closer to $6bn.

Businesses will be given a 12-month amnesty to pay unpaid super to workers, with interest, or face new penalties, including possible jail terms.

Financial Services Minister Kelly O’Dwyer has said rogue employers who fail to take advantage of the amnesty will be hit with court orders under the government’s superannuation guarantee integrity measures.

It is estimated the amnesty will result in $230m in unpaid super being handed to about 50,000 employees.

Last week, business groups used a hearing for the Senate inquiry to complain about the compliance system for super­annuation payments.

“I think it is onerous,” said Kate Carnell, the Australian Small Business and Family Enterprise Ombudsman.

“We think that it needs to be very clear that small businesses can identify the amount of unpaid super that they’ve got and pay it either in a lump sum or, in agreement with the ATO, over a period of time,” Ms Carnell said. “We should remember that not too many small businesses have lazy chunks of money sitting in their bank account.”

Australian Chamber of Commerce and Industry associate Dick Grozier said the idea to lobby for an amnesty for unpaid super originally came from one of the industry group’s ­members.

Mr Grozier said he had met with officers from the Treasury and the tax office in late 2015 to explain the proposal in detail.

“I have no way of estimating the proportions of employers who might have small amounts of charge or large amounts of charge, or the propensity to come forward under the amnesty,” Mr Grozier said.

“It is likely that serial non-compliers who are wilfully not ­complying are less likely to take advantage of the amnesty than genuinely non-wilful non-­compliers,” he said.

Although the figures provided by the ATO to the Senate inquiry jump around from year to year, the number of employers that had been the subject of a worker complaint and the number of those submitting a superannuation shortfall statement to the tax office both hit their highest point since 2014. Data for financial years earlier than this are held in legacy systems and are inaccessible.

The number of companies that were rebuked for underpayment of super when they were being investigated for other compliance issues by the tax office also rose 46 per cent over the last year. This was also the highest point on record since the 2014 financial year.

Employers who fail to take advantage of the amnesty will face higher penalties when caught of at least 50 per cent of the money they owed, on top of the unpaid super.

Legislation before parliament will allow the Australian Taxation Office to seek court-imposed penalties for employers who defy directions to meet their superannuation guarantee liabilities, including up to 12 months’ jail in extreme cases.

The bill will also require super funds to report employer ­contributions at least monthly to the tax office, allowing for the earlier identification of non-­payment.