SME’s who don’t pay employees their full superannuation entitlements will face stiffer penalties under proposed federal laws, making it crucial for employers to get their payments systems right to ensure timely payments.
Businesses will be given a 12-month amnesty to pay workers any unpaid superannuation guarantee (SG) payments or face harsher penalties under a Bill the Federal Government has recently introduced into Parliament.
Under the proposed legislation, to use the amnesty, employers must pay all the SG that is owing to their employees, including interest. The amnesty will make it easier for employers to pay outstanding employee entitlements as the Federal Government will set aside penalties for late payment that are normally paid by employers.
Employers that do not take advantage of the one-off amnesty will face steeper penalties when they are subsequently caught – in general, a minimum 50 per cent on top of the superannuation they owe workers. Throughout the amnesty period, the ATO will continue its usual enforcement activity against employers for those historical obligations they don’t own up to voluntarily.
The Bill will also require superannuation funds to report employer contributions at least monthly to the ATO, allowing for the earlier identification of non-payment. Fraudulent businesses that deny workers their superannuation will find it harder to avoid getting caught.
The proposed new measures are welcome, and they are needed. The ATO has previously estimated that in 2014-15, around $2.85 billion in SG payments went unpaid. While that represented a 95 per cent compliance rate, any level of non-compliance is unacceptable as
it is tantamount to wage theft, which is why the Government has given the ATO the resources it needs to enforce compliance.
Technology can help
New technology can help employers pay their workers their full superannuation entitlements on time.Software overlay systems like PayVu can significantly speed up the payment of superannuation to the same day and reports these payments to the ATO via Single Touch Payroll (STP) as they are made.
For employers with 20 or more employees, STP reporting of SG payment information will be mandatory from 1 July 2018. STP streamlines the way employers report tax and superannuation information to the ATO, which will be able to track which employers are paying the right amount of superannuation – and which ones are not.Importantly, this technology removes the payment delay incurred when an employer uses a clearing house to pay SG. When paying superannuation via a clearing house, an average of 4.2 days elapses between the money leaving the employer’s account and arriving at the superannuation fund’s account. With this new technology, payments can be transferred the same day.
STP processing will also go a long way to avoiding superannuation payments getting lost in the system. If payments get sent to wrong accounts, the software provider will help to get the refund sent directly to employers, not a clearing house, from where it can be recontributed into employees’ accounts, where it belongs immediately.
Quicker payment of superannuation will benefit employees as they can start earning returns on their money without delay. As it is now, the refund can end up sitting in clearing houses’ accounts for an indeterminate time, and clearing houses earn interest on this – at employees’ expense.
Employers too will spend much less time administering their superannuation obligations and avoid complicated payment processes, saving valuable time and money. If you haven’t already, as an employer you should update your payment systems to meet the ATO’s STP requirements and to ensure employees are paid their full wage and superannuation entitlements, on time, all the time, stress-free.
Robin Beauchamp, CEO, InPayTech
