The ATO estimates that Australian businesses have failed to pay about $17 billion in superannuation from 1 July 2008 to 30 June 2016.
When super isn’t paid on time it is payable to the ATO as superannuation guarantee charge (SGC). This means that it is up to the ATO to collect unpaid superannuation on employees’ behalf when super is not paid on time.
So what is the ATO doing to collect the billions of dollars of super which employees are not getting paid each year.
With single touch payroll having been introduced the ATO is now more aware than ever when a business fails to comply with its PAYG Tax and superannuation obligations. The ATO will now be able to take action to recover unpaid superannuation quicker than ever, including by issuing Director Penalty Notices and using the new measures available to it, as set out below.
Director Penalty Notices for superannuation
If a company fails to pay superannuation and it also fails to lodge Superannuation Guarantee Charge Statements with the ATO within the required period, the directors of the company are automatically personally liable for unpaid superannuation. In these circumstances the ATO can issue a Director Penalty Notice to recover unpaid superannuation from the directors and take recovery action to recover the superannuation owed from the director(s). This type of Director Penalty Notice is commonly referred to as a Lockdown Director Penalty Notice. The required periods for lodgement of Superannuation Guarantee Charge Statements are as follows:
|Quarter||Period||Super Due for Payment||SGC Statement Due Date|
|1||1 July – 30 September||28-Oct||28-Nov|
|2||1 October – 31 December||28-Feb||28-Feb|
|3||1 January – 31 March||28-April||28-May|
|4||1 April – 30 June||28-Jul||28-Aug|
We have recently seen an increase in the number of directors who have received Director Penalty Notices for unpaid superannuation and in most circumstances these Director Penalty Notices are based on estimates of superannuation owed, which the ATO has calculated using information available to it. This is because commonly when superannuation is not paid a company will also not lodge a Superannuation Guarantee Charge Statement.
Where the ATO has estimated superannuation owed and issued a Director Penalty Notice it is nearly always aLockdown Director Penalty Notice as superannuation has not been reported to the ATO by lodging Superannuation Guarantee Charge Statements on time. In these circumstances the amount claimed by the ATO cannot be avoided by the director by placing the company in liquidation or voluntary administration.
Legislation passed targeting businesses which do not pay superannuation
The Federal Government passed legislation in December 2018 which gives the ATO powers to give directions to employers to pay outstanding employee superannuation. The failure to comply with a direction to pay superannuation may result in a fine of up to $10,500 or 12 months imprisonment.
The legislation also provides the ATO with the power to direct business owners / company directors to completetraining courses on employers’ requirements to pay superannuation.
Funding for ATO tax avoidance taskforce
The Federal Government has provided funding to the ATO so that it can investigate and take appropriate action where a business has failed to pay employee superannuation or is otherwise failing to pay tax debts or is involved in tax avoidance. The funding which the Federal Government has provided to the taskforce is approximately $700 million over a period of four years.
How do you avoid the ATO taking recovery action
You should naturally always make sure that superannuation is paid on time.
However, if you cannot pay superannuation, or other debts on time, given that the ATO is now quicker than ever to take action against businesses which don’t comply with their superannuation payment obligations it is now more important than ever to quickly seek out advice and assistance.
If you are falling behind with payment of employees’ super, or you need financial assistance in general please get in contact with us for a free, no obligation discussion.