New Superannuation Guarantee Penalties

By Cathi Norman - February 13, 2019

In new legislation that has passed the Parliament this week the Australian Taxation Office (ATO) will be given additional powers in relation to penalties for employers who fail to comply with superannuation guarantee requirements.

Where employers defy directions to pay their superannuation guarantee liabilities, the ATO will now be able to issue education directions and apply for court-ordered penalties, including up to 12 months’ imprisonment.

New enforcement and collection powers will be given to the ATO, including strengthened arrangements for director penalty notices.  Employers should also be aware that the ATO will now have additional tools available to closely monitor superannuation compliance.

The new legislation gives the ATO the power to issue directions to employers to undertake specific actions where the Commissioner is satisfied that there has been a failure to comply with an obligation or a failure to pay a charge. These directions are designed to enhance employer compliance with their superannuation guarantee obligations.

Key features of a direction to pay superannuation guarantee charge are as follows:

  • The Commissioner can issue a direction to an employer if the employer has failed to pay an amount of superannuation guarantee charge, or an estimate of superannuation guarantee charge, for a quarter.
  • The employer must ensure that the amount of the unpaid liability is paid within the period specified in the direction.
  • Failure to comply with the direction can result in criminal penalties including imprisonment.

Key features of an education direction are as follows:

  • The Commissioner can issue a direction to an employer if the Commissioner reasonably believes the employer has failed to comply with a superannuation obligation.
  • The employer who has received the direction must complete an approved course, or for non-individual employers, ensure an individual who participates in the decision making of the business completes the course. The employer must provide proof of completion to the Commissioner.
  • Failure to comply with the direction can result in administrative and/or criminal penalties.

The new laws also include Single Touch Payroll reporting for all employers from 1 July 2019, giving the ATO up to date information about the amounts of superannuation that employers owe their employees. The use of Single Touch Payroll streamlines employer reporting processes associated with hiring new employees, by providing digital services for completion of tax file number declarations and superannuation standard choice forms. It should be noted that the ATO will be able to inform employees about the action being taken to recover unpaid superannuation.

If you have any questions in relation to superannuation guarantee, please contact Pitcher Partners.

Any financial product advice is provided by Cathi Norman (Authorised Representative No. 001252586) as a sub-authorised representative of Pitcher Partners SA Financial Pty Ltd, AFSL No. 487781. The advice provided is general in nature and is not personal financial product advice. The advice provided has been prepared without taking into account your objectives, financial situation or needs and because of this you should, before acting on it, consider the appropriateness of the advice having regard to your objectives, financial situation and needs. You should carefully read and consider any Product Disclosure Statement (PDS) that is relevant to any financial product that has been discussed before making any decision about whether to acquire the financial product.

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