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Treasury Laws Amendment (Recovering Unpaid Superannuation Bill) 2019
The coalition government has introduced a new era of superannuation guarantee enforcement.
In the last parliament, the government passed a robust package of legislation to ensure employers can no longer hide from their obligations to pay employees their full superannuation entitlements. Those laws give the ATO the tools it needs to detect future noncompliance and punish employers appropriately, including, where necessary, criminal sanctions in the most egregious cases.
New visibility into payment of superannuation guarantee combined with serious financial and legal consequences for noncompliance will all but eliminate future non-payment.
But we know that historical noncompliance has been significant. Last year the ATO found that, while 95 per cent of superannuation guarantee obligations are paid in full, in 2015-16 around $2.8 billion went unpaid.
Some superannuation guarantee underpayment is malicious on the part of certain employers. However, some is inevitably inadvertent or is the result of poor payment systems, often in a stressed business situation. Regardless of the motivation, in all cases it’s the employees who, sadly, miss out.
Reuniting as many workers as possible with the superannuation that is rightly theirs is this government’s priority.
With this objective in mind, this bill introduces a one-off amnesty to employers who come forward and do the right thing by their employees by rectifying historical noncompliance with their superannuation guarantee obligations. The amnesty complements our Super Guarantee Integrity reforms which were passed earlier this year.
Importantly, to qualify for the amnesty, employers will have to meet two criteria: they must come forward voluntarily, without direct prompting from the ATO, and they will have to pay all of their employees’ entitlements.
Reuniting workers with their superannuation, as I stated at the beginning, is government’s priority.
We want employers to bring these underpayments out into the open and pay them off as soon as possible so that their employees can receive the super they are entitled to.
The bill offers both a carrot and a stick to encourage non-complying employers to come forward.
Importantly, the bill does not reduce employees’ entitlements by one cent. Everything that an employer owes to its employees must still be paid, paid immediately and paid in full.
Rather, the bill removes the penalties and fees paid to the Commonwealth, which might otherwise apply to historical superannuation guarantee noncompliance by employers that are eligible for the amnesty.
Employers who do the right thing and come forward during the amnesty period will also be able to claim tax deductions for payments made under the amnesty, which is the same outcome as if they had paid on time.
Those are the carrots.
The stick will be reserved for employers that could come forward during the amnesty period but choose not to do so and are subsequently caught by the ATO. Their failure to come forward will generally result in the imposition of a minimum 100 per cent penalty on the employer, on top of the other penalties and charges that are ordinarily associated with late payment of super guarantee obligations.
Of course, throughout the amnesty period the ATO will continue its usual enforcement activity against employers for historical noncompliance that they don’t own up to voluntarily.
The laws we passed earlier this year, combined with near real-time reporting, ensures that the ATO now has much greater visibility of when super is not paid.
The amnesty period runs from 24 May 2018 to six months after the day this bill receives royal assent, and applies to any historical super guarantee debts up to and including the March quarter of 2018.
Full details of the measure are contained in the explanatory memorandum.
Click here to access a PDF copy of the Hansard transcript of this speech.