The Australian government is planning to increase penalties for employers that fail to cover their employees’ pension guarantee payments.
According to The New Daily, unpaid superannuation entitlements were first identified as an issue in late 2016, with the Australian Taxation Office (ATO) calculating that unpaid pension contributions amounted to AUS$2.85 billion (US$2.19 billion) each year.
Research by Industry Super Australia and Cbus put the figure even higher, claiming a shortfall of AUS$5.6 billion (US$4.3 billion) in 2013/4. It attested that nearly a third of workers who were entitled to a pension were affected, with the average shortfall amounting to AUS$2,025 (US$1,156) each.
Revenue and financial services minister Kelly O’Dwyer said: "This bill introduces very serious consequences for employers who break the law by short-changing their employees. The ATO will have access to new enforcement and collection provisions, including strengthened arrangements for director penalty notices.”
If employers defy instructions to pay their superannuation guarantee liabilities, the ATO could apply to enforce court-ordered penalties, which include up to 12 months imprisonment, she said.
The bill – The Treasury Laws Amendment (2018 Measures No 4) Bill 2018 – will also extend Single Touch Payroll to cover all but the smallest employers from 1 July 2019 in a bid to modernise payroll reporting. The Single Touch Payroll system is intended to provide the Tax Office with up-to-date information about what pension contributions employers owe their employees.
The government already has legislation before Parliament to close a loophole that allows unscrupulous organisations to underpay superannuation contributions for employees using salary sacrifice arrangements. The Bill will enable the “transition to retirement income stream” of a pension fund member to be paid on their death to their eligible dependants without it having to be commuted and a new income stream started.
Double taxation of retirement savings accounts and deferred annuities that are purchased by superannuation funds would also be eliminated so that the fund, or RSA, could meet their liability to pay a deferred superannuation income stream.
But Industry Super Australia said the reforms would not fully address the unpaid pension situation and has called for the guarantee to be widened. Currently only those earning AUS$450 (US$346) or more from a single employer are entitled to it.
ISA’s public affairs spokesman Matt Linden said: "This limit should be scrapped as it’s not necessary in the current environment. The limit hits women hard, with 42% of women earning less than AUS$450 a month from one employer not receiving super."
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
The Australian government is planning to increase penalties for employers that fail to cover their employees’ pension guarantee payments.
According to The New Daily, unpaid superannuation entitlements were first identified as an issue in late 2016, with the Australian Taxation Office (ATO) calculating that unpaid pension contributions amounted to AUS$2.85 billion (US$2.19 billion) each year.
Research by Industry Super Australia and Cbus put the figure even higher, claiming a shortfall of AUS$5.6 billion (US$4.3 billion) in 2013/4. It attested that nearly a third of workers who were entitled to a pension were affected, with the average shortfall amounting to AUS$2,025 (US$1,156) each.
Revenue and financial services minister Kelly O’Dwyer said: "This bill introduces very serious consequences for employers who break the law by short-changing their employees. The ATO will have access to new enforcement and collection provisions, including strengthened arrangements for director penalty notices.”
If employers defy instructions to pay their superannuation guarantee liabilities, the ATO could apply to enforce court-ordered penalties, which include up to 12 months imprisonment, she said.
The bill – The Treasury Laws Amendment (2018 Measures No 4) Bill 2018 – will also extend Single Touch Payroll to cover all but the smallest employers from 1 July 2019 in a bid to modernise payroll reporting. The Single Touch Payroll system is intended to provide the Tax Office with up-to-date information about what pension contributions employers owe their employees.
The government already has legislation before Parliament to close a loophole that allows unscrupulous organisations to underpay superannuation contributions for employees using salary sacrifice arrangements. The Bill will enable the “transition to retirement income stream” of a pension fund member to be paid on their death to their eligible dependants without it having to be commuted and a new income stream started.
Double taxation of retirement savings accounts and deferred annuities that are purchased by superannuation funds would also be eliminated so that the fund, or RSA, could meet their liability to pay a deferred superannuation income stream.
But Industry Super Australia said the reforms would not fully address the unpaid pension situation and has called for the guarantee to be widened. Currently only those earning AUS$450 (US$346) or more from a single employer are entitled to it.
ISA’s public affairs spokesman Matt Linden said: "This limit should be scrapped as it’s not necessary in the current environment. The limit hits women hard, with 42% of women earning less than AUS$450 a month from one employer not receiving super."
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
