IPA labels penalties for SG non-compliance ‘excessive’
With employers being asked to calculate SG contributions and the SG charge on a different basis to normal, the Institute of Public Accountants has urged the government review the “punitive costs” on employers who pay their SG contributions late.
Superannuation Guarantee (SG) contributions paid by employers is key to a person’s retirement plan but some penalties for non-compliance may be detrimental to small business and there may be more red tape on the way, according to the Institute of Public Accountants.
IPA chief executive Andrew Conway said there is no doubt that employers should be making timely and accurate superannuation contributions on behalf of their staff but some penalties associated with late payments and non-compliance are draconian to say the least.
“The imposition of punitive costs on employers who pay their SG contributions late or in part can be extremely damaging on a small business struggling with cash flow issues,” said Mr Conway.
If the employer does not pay the correct amount of SG contributions on time, it can be deemed as a shortfall and onerous charges are imposed, said Mr Conway.
“This consists of the total of the employer’s individual SG shortfalls for each employee and attracts further nominal interest and administration fees for that quarter,” he said.
“To add further insult, employers are then asked to calculate SG contributions and SG charges on a different basis to the norm which adds further compliance complexity to the employer. This calculation can actually make the shortfall higher. And worse, all of the above is non-deductible.”
Mr Conway said the issue is further compounded where an employer doesn’t lodge an SG statement or provide information to the commissioner then they are also liable to pay the additional SG penalty at a rate of up to 200 per cent of the SG charge payable.
“By all means, hit the recalcitrant employers hard which is where some of the new proposed measures are aimed at [including] education, imprisonment and direction to pay. Repeat offenders that are doing the wrong thing by their employees should be dealt with but let’s get human, and do not tar every small business with the same excessive compliance brush,” he said.
“A more measured approach is required for genuine late payers than the current penalty regime allows.”
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.