IPA chief executive officer Andrew Conway said the IPA believes the penalties inflicted on employers who pay employee SG payments late or at the incorrect amount are “disproportionate to the mischief” of the act.
“In fact, the penalty regime can lead to further non-compliance delays in employers making superannuation contributions,” said Mr Conway.
“The onerous penalty regime has done little to address the problem of unpaid superannuation, which some experts say is on the rise.”
Mr Conway said the IPA supports the government’s move to improve small business superannuation compliance through the expansion of the small business clearing house.
“However, more can be done. In particular we believe the non-deductibility of late SG contributions when paid, is a harsh and unreasonable outcome,” he said.
“The interest charge, administrative fee and potential penalties are sufficient incentives for an employer to meet their SG obligations rather than pay the SG charge.”
He noted the importance of striking the right balance between employers who pay super on time and those who do not.
“Currently the SG is worked out based on the employee’s salary and wages which is a broader base than ordinary time’s earnings. We recommend moving to a single base for calculations, which will simplify the process for employers to comply with their super obligations,” he said.
“Removing the need to pay a potentially higher SG charge than the original amount of the contribution required to be made is a welcome improvement, particularly for small businesses.”
Mr Conway also argued that the non-deductibility of the SG charge is unreasonable and the requirement to complete and lodge an SG charge statement should be removed.
Read more:
Important changes for EPOA legislated
ASIC reports further drop in registered auditors
Had a small business client with unpaid Super (much of which was based on wages for him and his wife, by the way). He was in the process of arranging finance to pay the arrears, when he was audited and hit with penalties which effectively doubled his liability.
Couldn’t get finance for the higher amount and was forced to close the business and liquidate the company.
In the end nothing was paid.
Penalties are fine as a deterrent, but they often end up just being the straw that breaks the camel’s back, and everybody loses.
I also disagree. Employers who do not pay employee superannuation are stealing. Too often we let bad behavour pass without penalty. Some employers never learn a lesson without hitting their hip pocket.
By the way, I was an employer of over 20 staff for 15 years and valued them with correct wages and conditions, so I am not speaking as a disgruntled employee.
Sorry Andrew, I cannot agree. I believe a reduction of the penalty tell the recalcitrants it does not really matter and we will end up with more. I believe what is needed if for more accountants to actually help their clients get their SG correct. I believe SG should be reported on the PAYG Payment Summary at year end.