A new report from the tax office estimates that the net superannuation gap — which is the difference between the value of SG gaps required to be paid by law minus what is actually paid — is about $2.85 billion.
The ATO said there is a high rate of voluntary compliance with the SG system, with about 95 per cent of payments being made without regulatory intervention, but ATO superannuation deputy commissioner James O’Halloran told SMSF Adviser there is sufficient evidence to justify a significant increase in compliance activity.
For one, the net gap has increased from 3.8 per cent in 2009/10 to 5.2 per cent in 2014/15 of the total amount that was owed to employees.
Also, about 20,000 reports of unpaid superannuation are made to the ATO each year, with key non-compliance drivers including poor cash flow management by employers, poor record keeping, and insolvency.
The ATO will be increasing its “proactive” SG casework by about one-third this financial year, Mr O’Halloran said. This will involve reviews and audits, and employers who are found to have breached their obligations will be subject to penalties.
“Certainly, by the time it gets to an audit, we would be looking at the application of some form of penalty. In terms of debt collection… we often issue a garnishee notice or a director penalty notice,” he said.
Penalties can apply of up to 200 per cent per employee where an SG payment is not met. There is an interest component to this also.
“People should take the payment of SG very seriously, it has a real impact on employees,” said Mr O’Halloran.