Getting Super Serious

Employers who don’t pay super face up to a year in prison

The ATO is cracking down on employers who are not paying their employee’s superannuation.

Under draft legislation unveiled by the Turnbull Government on 1 February 2018, there will be greater penalties for employers who fail to comply with superannuation legislation which requires employers to pay 9.5% superannuation on behalf of their employees.

The Tax Office will be keeping a close eye on the Directors of companies that are not contributing to their employees’ superannuation.

Employers are required to pay 9.5% of their employees’ wages into their choice of superannuation fund. This responsibility is not only for full-time employees but also includes part-time and casual employees, over the age of 18 who earns more than $450 per month. Superannuation contributions for each quarter are due 28 days after the end of the quarter.

In cases where employers defy directions to pay their superannuation guarantee liabilities, the ATO will be able to apply for court-ordered penalties, including up to 12 months imprisonment.

In 2014-15, the Tax Office estimates that there was $2.85 billion- a -year shortfall in superannuation payments. This amount equates to a 5.2% gap in what employers should be paying their employees in super.

The new laws are as a result of the recommendations from the  Superannuation Guarantee Cross‑Agency Working Group, which completed its report into non-payment of super almost a year ago.

From the middle of this year, super funds will have to report each payment made to them by employers to the Tax Office, when the payment occurs. As a result, the Tax Office will have real-time information and allow the Tax Office to respond in a more timely manner for superannuation guarantee non-compliance.

The Minister for Revenue and Financial Services, Kelly O’Dwyer said the combined measures will provide the ATO with more timely information to “support earlier detection and proactive prevention of non-payment of superannuation that is rightfully owed to employees”.

If you have any questions about your superannuation responsibilities