A recent media release by the Australian Taxation Office has highlighted their intention to increase case work by their officers in the superannuation guarantee (SG) area. This media release has followed a recent report surrounding the SG “gap”.
The SG gap has been defined as the difference between the theoretical amount payable by employers to be compliant with their SG obligations and actual contributions received by funds. Currently, the ATO estimates this gap to be 5.2% in SG payments for the 2014/15 income year.
The increase in case work will be designed to educate, support, monitor and enforce compliance by employers. Included in enforcing compliance is the fact that penalties can apply of up to 200% per employee where an SG payment is not met, with an interest component to be added.
Risk mitigation steps
Some employers may have a superannuation expense well below 9.5% of their salary and wages expense for a particular period. While some of the reasons for this may be valid, it is becoming a necessity to work through these situations with clients to ensure they are SG compliant.
Other situations may exist where an employer has many payments during a financial year to contractors and subcontractors. It is prudent to ensure that your clients are aware that in certain circumstances there is a difference between the requirements for PAYG withholding and SG.
Recently, the federal government also announced that they will move to boost the recovery powers of the ATO. Included in their suggestions have been to strengthen the laws surrounding director penalty notices and to use security bonds for high-risk employers.
Until then, the ATO is looking to use predictive analytical techniques for reviewing SG obligations of employers. The introduction of Single Touch Payroll will further improve visibility to the ATO in the future for high-risk SG industries.
Single Touch Payroll
Single Touch Payroll (STP) reporting will be mandatory from 1 July 2018 for employers with 20 or more employees. STP requires employers to align reporting of PAYG withholding and superannuation contributions with their payroll processes. Employers that report under STP will be eligible for relief from obligations to provide payment summaries to individuals and the annual payment summary report to the ATO.
