The Australian Taxation Office (ATO) plays an important role as a guardian of Australia’s superannuation system. In relation to more than 14 million Australian workers, the ATO ensures employers are making their mandatory contributions to superannuation.
While the overwhelming majority of employers do comply with their obligations, in its 2022-23 superannuation guarantee compliance snapshot, the ATO estimated the gap in superannuation compliance was 5.1 per cent or $3.6 billion. This is a significant amount of money that employees are potentially missing out on.
In an effort to reduce this gap, the ATO uses a variety of compliance methods, from simple reminders to investigations of employee complaints and full-scale audits.
Following the full introduction of Single Touch Payroll (STP) reporting in 2019, the ATO now has access to real-time salary payment data and matches this against contribution data provided by superannuation funds.
This allows the ATO to quickly identify instances where employers are not making their mandatory contributions and take proactive actions including reminders and prompts for employers to check their obligations.
Where the required superannuation has not been contributed on time, the employer is required to lodge a superannuation guarantee charge (SGC) statement with the ATO and pay the SGC liability.
In 2022-23, $1.13 billion was raised via SGC liabilities.
Most of the SGC liabilities raised – $534 million – came from 23,300 employees making complaints of superannuation underpayments to the ATO, and the ATO has only completed 54 per cent of these cases to date.
Clearly employees now have a much higher awareness of their superannuation entitlements and are prepared to use the ATO as their champion to recover underpayments.
The ATO also initiated 1400 audits which resulted in a further $70 million of SGC liabilities raised. While a smaller number than employee complaints, it shows the ATO is active in keeping employers compliant, even if employees are unaware or ambivalent.
In these cases of ATO compliance actions, the SGC liabilities raised include additional penalties of $157 million.
There were also $445 million of SGC liabilities raised where employers made a voluntary disclosure to the ATO, and importantly in these cases, the ATO has discretion to waive additional penalties. It appears the ATO has waived penalties in most of the voluntary disclosure cases.
Company directors can be personally liable for unpaid superannuation where the company has not made payment, as proven by the fact that 3,660 director penalty notices were issued.
What should employers do?
The ATO’s ability to obtain and analyse enormous amounts of data in close to real-time means employers must be on top of their game.
It’s important for employers to regularly review their time and attendance and/or payroll systems to ensure superannuation contributions are correctly calculated and remitted to the right superannuation accounts by the due date.
Where an error is detected, correcting it by making a voluntary disclosure to the ATO provides the best opportunity for having additional penalties waived. It is also easier for employers to manage the whole employee engagement aspects, rather than being on the back foot when employees have made a complaint to the ATO.
Employers who receive a reminder or prompt from the ATO should immediately check their contributions and, if required, take steps to correct any non-compliance. The ATO is right in most cases.
Finally, superannuation compliance will become even more challenging from 1 July 2026, with the proposal to have employers pay superannuation contributions at the same time as wages. Payday superannuation will be a game-changer.
BDO can assist with your payroll tax compliance
BDO has payroll, internal audit and tax specialists who can assist employers in managing their superannuation obligations and aid them to avoid becoming a statistic in the ATO’s next superannuation guarantee compliance snapshot. Contact us today to find out how we can assist with your business’s payroll compliance.
