Employers who deny their employees their superannuation entitlements face up to a year in jail under legislation drafted by the Federal Government.
According to Minister for Revenue and Financial Services, Kelly O’Dwyer, the purpose of the Treasury Laws Amendment (Taxation and Superannuation Guarantee Integrity Measures) Bill 2018 is protect workers’ superannuation entitlements and “modernise” the enforcement of the superannuation guarantee.
The Minister said the legislation, if enacted, would extend Single Touch Payroll to all employers from 1 July 2019 to improve the reporting of superannuation obligations as well as the ability of the Australian Taxation Office (ATO) to access real time information about an employer’s compliance. In addition, she said the reforms would see superannuation funds commence ‘event-based’ reporting to the ATO on contributions made by employers from 1 July 2018.
“Combined, these measures 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,” Minister O’Dwyer said. “The Government’s commitment to a Director Identification Number will help identify those directors who are robbing their employees of their superannuation.”
Minister O’Dwyer said there will be “serious consequences” for employers who break the law as a result of the ATO being granted a suite of enforcement and collection tools, including strengthened arrangements for director penalty notices and security deposits for superannuation and other tax-related liabilities.
In cases where employers “defy” directions to pay their superannuation guarantee liabilities, Minister O’Dwyer said the ATO will be able to apply for court‑ordered penalties, including up to 12 months’ imprisonment. She added that the ATO would also have the ability to require employers undertake training to “embed ongoing compliance”.
“These measures follow the recommendations of the Superannuation Guarantee Cross‑Agency Working Group, which made targeted proposals for overcoming barriers to better compliance,” Minister O’Dwyer said. “The Working Group also recommended closing a loophole that could be used by unscrupulous employers to short‑change employees who use salary sacrifice arrangements. The Government introduced legislation to close this loophole last year, and will progress that legislation along with this broader compliance Bill.”
The export draft of the Treasury Laws Amendment (Taxation and Superannuation Guarantee Integrity Measures) Bill 2018, together with explanatory material, is now subject to a consultation period ending 16 February.