ATO Crackdown on Super Payments
ATO uses Single Touch Payroll data to crack down on unpaid super by businesses.
The Australian Taxation Office (ATO) is approaching thousands of businesses about late or unpaid superannuation payments as it begins flexing its unprecedented access to company data through Single Touch Payroll systems.
Accounting experts warn that businesses now have nowhere to hide if they have underpaid staff superannuation entitlements.
“With Single Touch Payroll (STP) in place, there is more transparency on non-compliance of super payments,” said Scott Young, representative of Accounting & Business Advisory+ and Head of Accounting at Hood Sweeney. “There really is nowhere to hide now.”
With the introduction of STP, which was applied to businesses (including those with 19 staff or less) from 1 July 2019, the ATO is more aware than ever of the status of a business’s superannuation and PAYG tax obligations.
Last financial year the ATO contacted 22,000 businesses and recovered $805 million worth of payments through its scrutiny of superannuation.
Under Superannuation Guarantee (SG) laws, employers are required to contribute at least 9.5% of workers’ earnings to a superannuation fund or retirement savings account.
The ATO has revealed details of a recent pilot where it contacted 85 employers who hadn’t paid their superannuation guarantee, prompting about half to pay outstanding amounts, amid ongoing efforts to crack down on firms not complying with the law.
“We intend to expand this approach to those employers who haven’t paid SG to their employees within 30 days after the end of the reporting quarter,” ATO deputy commissioner James O’Halloran said in a recent speech at the Association of Superannuation Funds of Australia Policy Roadshow.
Until this year, the ATO only received annual reports from APRA-regulated funds, but now receives progressive quarterly information about Superannuation Guarantee payments.
According to reports sent to the ATO in early-July, 637,000 employers paid about $11.3 million super fund members a total $71 billion in super contributions in 2018-19.
The ATO will now be quicker to take action to recover unpaid superannuation. This will include exercising the new powers granted to it, and also in issuing Director Penalty Notices.
New legislation was passed in December 2018 that gives the ATO the power to direct employers to pay unpaid superannuation.
The director of a company that fails to meet a Super Guarantee Charge (SGC) liability in full by the due date automatically becomes personally liable for a penalty equal to the unpaid amount.
When an SGC liability remains outstanding, the ATO may issue a director penalty notice (DPN), though this is necessary only to enable it to start legal proceedings to recover the penalty. Even without issuing a notice, the ATO can collect the penalty by other means, for example, by withholding a tax refund.
In addition, there are administrative penalties and interest charges associated with failure to comply with SG obligations.
At the extreme, failure to abide by a direction to pay superannuation can result in a fine of up to $10,500 or 12 months imprisonment.
The government has also provided funding to the ATO specifically to investigate and take action in respect of tax avoidance, including failure by businesses to pay superannuation. The total amount of funding provided is about $700 million over a four-year period.
Given the ATO’s crackdown on businesses that don’t pay superannuation, it is now more important than ever to obtain professional advice on the available strategies and options you have.
If you have questions about transitioning to a Single Touch Payroll system, or your Superannuation Guarantee obligations, contact your Hood Sweeney Accounting & Business Advisory+ relationship manager on 1300 764 200.
+Hood Sweeney Accounting & Business Advisory ABN 30 007 696 595, AFS License No. 485569
Disclaimer: The information in this article is factual information, and not advice. The information is objectively ascertainable information and is not tailored to your personal circumstances. You should consider obtaining advice before making a decision in relation to this information.