Under new legislation drafted by the Federal Government, employers could face up to 12 months in jail for failing to meet their compulsory employee superannuation requirements.
Employers are generally required to pay 9.5% of an employees’ gross salary in superannuation. The proposed new rules have been put forward in response to recommendations made by the Superannuation Guarantee Cross Agency Working Group which was tasked with investigating non-compliance in the superannuation guarantee system. In their March 2017 report, the Working Group found, among other things, that small businesses account for approximately 70% of reported superannuation non-compliance.
The draft legislation contains a number of provisions including:
- extension of Single Touch Payroll to all employers from 1 July 2019 which will provide the Australian Taxation Office (ATO) with access to real time information about an employer’s superannuation compliance. Current legislation only required employers with over 20 employees to use Single Touch Payroll from 1 July 2018;
- requiring super funds to report each payment made to them by employers to the ATO when the payment occurs, effective from 1 July 2018;
- additional enforcement powers being granted to the ATO including strengthened arrangements for Director penalty notices and the requirement for security deposits for superannuation and other tax-related liabilities;
- the ATO will have the ability to apply for court-ordered penalties including up to 12 months’ imprisonment; and
- the closing of a loophole which allowed employers to short-change employees who salary-sacrificed some of their salary into super, by only paying the 9.5% compulsory superannuation requirement on the reduced gross salary.
The consultation period for the draft legislation ends on 16 February 2018.
If you are en employer who has fallen behind on your compulsory employee superannuation obligations, feel free to call us to discuss how we can help get you back on track.
Navarra Kovac Chartered Accountants 