The Australian Taxation Office (ATO) recently received new powers as part of reforms aimed to close the ‘Superannuation Guarantee gap’ – referring to the gap between the amount of super contributions Australian employers are expected to make, and the amount they actually do.
Dana Fleming, a tax partner with accounting firm KPMG, noted that in 2015 alone this gap was around $2.85 billion, meaning just over 5 per cent of super guarantee contributions were not made by employers.
The reforms to help stop this non-compliance among employers, including requiring super funds to report the contributions they receive at least monthly and beefing up the ATO’s recovery powers, are “welcome reforms”, Ms Fleming said, but notably lacked “arguably the most powerful” tool that the ATO could have been given.
Absent from the reforms is a requirement for employers to make their super guarantee payments on a monthly, rather than quarterly basis, Ms Fleming noted.
“While appropriate transitional arrangements may be required, especially for small business, it’s puzzling that this simple step has not been taken,” she said.
Ms Fleming is not alone in her concern over unpaid super guarantee contributions, with federal MP Rebekha Sharkie recently tabling a bill in Parliament that pushed for even more reforms, including closing a loophole allowing employers to claim their employees’ voluntary contributions as employer contributions, and making super contributions a part of the National Employment Standards.
“There are at least 2.4 million workers in this country who have been underpaid their super, ripping out $3.6 billion from retirement savings,” Ms Sharkie said.
“If we don’t do something to make it easier for workers to find out that they haven’t been paid their full entitlements, and give them more power to stand up for their rights, that retirement rip-off is going to balloon out to $66 billion.”