New measures to enforce superannuation guarantee compliance
Illegal phoenix activity has been a hot topic over the past 12 months and as previously discussed in our articles “Did you know the ATO will soon be able to report tax debt to credit agencies” and “Know Your Advisor”, a comprehensive package of reforms is being implemented to combat illegal phoenix activity and fight tax evasion, including Director Identification Numbers (DINs) and other measures to dissuade those engaging (and promoting) phoenix activity.
Further to these reforms, the Government has released a draft Superannuation Guarantee Compliance Bill aimed at cracking down on Superannuation Guarantee underpayment. Employers failure to pay superannuation, sees employees missing out on almost $2.85 billion a year in superannuation (as estimated by the ATO in 2014-2015).
The Superannuation Guarantee Compliance Bill
Intended to improve compliance and ensure employees receive at least the minimum 9.5% superannuation, under the proposal, employers who fail to follow the ATO’s direction to pay superannuation entitlements to their employees will be subject to court-ordered financial penalties and directors could face up to 12 months imprisonment.
Additionally, directors who do not pay superannuation will be flagged using their DIN, assisting the ATO in identifying their misconduct.
The bill proposes:
- Expansion of real time reporting of employer liabilities to all employees from mid‐2018;
- Mandatory Single Touch Payroll for all employers from mid‐2019 to better align payroll systems with regular reporting obligations; and
- Empowering the ATO Commissioner to issue written directions to employers, if the Commissioner reasonably believes an employer has failed to comply with a superannuation obligation.