Tax office told to lift its game on unpaid super – Senate inquiry report

Posted: Wednesday 03 May, 2017

A Senate committee has recommended sweeping reforms to ensure employees receive their correct super entitlements while suggesting lax compliance by the Australian Tax Office (ATO) over many years has contributed to the problem.

The Economics References Committee report, Superbad – Wage theft and non-compliance of unpaid Superannuation Guarantee, describesthe ATO’s reactive approach to unpaid super as ‘inadequate’ and “problematic”. It then, in 15 of 32 recommendations, targets ATO monitoring and compliance efforts.

Key amongst those recommendations is the public provision of accurate, reliable data on the extent of unpaid super – something the ATO was unable to produce during the inquiry. Instead the committee was forced to rely on an Industry Super Australia analysis of an ATO sample file that revealed 2.76 million Australian workers were underpaid their super by an average of $2,025 each,in 2013-14. 

Also noted is the ATO's over-reliance on employee complaints of underpayment and employer self-reporting. The committee emphasises that a shift out of the “paper age” into the “digital age” would greatly improve monitoring and compliance.

Industry Super public affairs director Matt Linden welcomed the findings, describing them as a wake-up call not only for the ATO but also employers and government.

“This is an issue that impacts the entire country by decimating personal savings; creating an uneven playing field for competing businesses; and ultimately driving up pension costs,” said Linden.

“Over the course of the inquiry we’ve heard from decent, hardworking people who weren’t paid their superannuation, and were then fired for having the temerity to ask why”.

“The Senate committee and an interagency working group convened by the Minister have spent almost six months on this – Australians now expect to see action in next week’s budget”.

“Unpaid super should no longer be a second or third order priority for the ATO – we need an urgent and concerted effort to detect non-compliance and enforce the law,” said Linden.

Key recommendations include:

  • Remove the $450 threshold on SG eligibility
  • Close the loophole that allow voluntary contributions to count towards an employer’s SG obligation
  • Require SG to be paid monthly and align with regular pay cycles
  • Review the definition of Ordinary Time Earnings for the purpose of SG calculations
  • Extend unpaid SG liabilities to corporate entities
  • Review ATO resourcing to ensure it is able to undertake effective compliance activities
  • Extend Single Touch payroll to all businesses

Employers are legally required to pay 9.5 per cent in superannuation towards every employee over the age of 18 earning more than $450 (gross) a month. This is the Super Guarantee.

Matt Linden is available for interview. Media contact: Phil Davey 0414 867 188

Industry Super Australia provides policy, research and advocacy on behalf of 15 not-for-profit Industry SuperFunds who are the custodians of the retirement savings of five million Australians.

Industry Super Australia Pty Ltd ABN 72 158 563 270, Corporate Authorised Representative No. 426006 of Industry Fund Services Ltd ABN 54 007 016 195 AFSL 232514