Legislation Update: Penalties for Unpaid Superannuation

Legislation Update: Penalties for Unpaid Superannuation

April, 2018 – The Government has introduced legislation to address the problem of unpaid super on a couple of fronts. The ATO estimates that employers fail to pay $2.8 billion of super entitlements each year, with some industry commentators suggesting the figures are much higher.

The legislation increases the penalties on employers who do not pay the compulsory 9.5% Superannuation Guarantee contribution, and makes employers personally liable for this payment. In circumstances where employers refuse ATO directions to pay outstanding super, they will be able to pursue penalties that include imprisonment.

The legislation also extends Single Touch Payroll (STP) to small employers from 1 July 2019. This is important because small employers are responsible for a significant part of unpaid super but had been exempt from the compulsory STP applying to medium and large employers from 1 July 2018. Under STP employers are required to provide salary and tax reporting to the ATO as part of the payroll process.

The ATO had often become aware of unpaid super following employee complaints. This legislation increases employer responsibilities and shifts the burden of enforcement more clearly to the ATO.


Written by David Haynes