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Employers, ATO rebuked for super underpayment

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Employers, ATO rebuked for super underpayment

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A leading superannuation figure has lashed out at employers for underpaying super for as much as 32 per cent of the working population, and the ATO for disguising the true size of the shortfall.

Industry Super Australia special adviser, and former Federal Treasury Retirement Income Modelling Taskforce director, Phil Gallagher, presented his analysis to a forum at the University of New South Wales in Sydney, in which he said as much as 2.76 million working Australians were paid less than 8.5 per cent of ordinary time earnings in super.

However, this figure – which uses data from the Australian Taxation Office (ATO) – does not account for the estimated 800,000 employees working in the cash economy, who are not receiving any superannuation contributions.


The shortfall, according to Mr Gallagher’s research using tax and superannuation records from 2013-14, equates to a staggering $5.591 billion.

“Even if half these estimates are true underpayment, they are of significant concern. The 2014-15 Annual Report of the Commissioner of Taxation showed only $372.4 million of underpayments transferred to employee funds,” he said in his paper.

“The Auditor-General has noted that only one half of underpayments identified by the ATO result in payments to employee accounts. In 2014-15, the ATO raised $734.8 million in underpayment (and received $372.4 million).”

Young people, lower income workers and men were most likely underpaid their Superannuation Guarantee (SG) entitlements, Mr Gallagher suggests. Trades workers, technicians, apprentices, labourers and machinery operators were among those probably underpaid as well.



Read more: The super compliance conundrum

Mr Gallagher also admonished the ATO for inaccurately calculating the true size of the superannuation shortfall, saying its methodology allowed higher than minimum payments as well as salary sacrificing to be included in the overall figures, meaning the reported shortfall is much lower than in reality.

It is not the first time that underpayment of employee superannuation entitlements has been in the spotlight.

In late 2016, Industry Super Australia and Cbus released data that suggested $3.6 billion was outstanding in employee superannuation entitlements.

However, business owners complained about the process being too heavily focused on their own input, and penalised them unfairly for inadvertent late payment, employee errors and other factors beyond their control.


Adam Zuchetti

Adam Zuchetti

Adam Zuchetti is the editor of My Business, and has steered the editorial direction of the publication since the beginning of 2016. Before joining My Business, he worked on fellow Momentum Media titles The Adviser and Mortgage Business.

The two-time Publish Awards finalist has an extensive journalistic career across business, property and finance, including a four-year stint in the UK. Adam has written across both consumer and business titles, including for News Corp Australia and Domain.

You can email Adam at This email address is being protected from spambots. You need JavaScript enabled to view it.

Employers, ATO rebuked for super underpayment
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