In the 2023-24 year employers paid 92.4% of the employee super that they were meant to pay without ATO intervention. That might sound like a reasonable percentage, but the 7.6% that was not contributed on behalf of innocent hard-working Australians is worth in excess of $5 billion.
Compulsory super guarantee might sound like it’s an employer contribution, but the reality is that market forces have adjusted wages over time so that the super contribution is funded by employees – who effectively forego salary now to provide for their future retirement. When an employer neglects to pay this super it comes out of the employee’s pocket.
The worrying thing is that the unremitted percentage is trending up. Employers in 2022-23 remitted more than 94% of the amount they were required to pay without ATO intervention.
In response the ATO is now threatening a heavier approach with businesses that refuse to engage and have unpaid super, PAYG withholding or GST obligations. This includes the issuance of director penalty notices (DPNs) and garnishees.
Employers should take this threat seriously. During 2023-24 the ATO issued 8,710 DPNs in relation to unpaid super for 6,500 companies. This was more than double the 3,660 DPNs issued in the year before. A DPN shifts the liability from the company, making each and every director personally liable for the full amount of the debt. This includes retired directors (if the debt was incurred before resignation) and new directors (even if the debt was incurred before commencement).
Another successful ATO tool is referrals from disgruntled employees. If you don’t pay super for your employees they are eventually going to squeak, especially if they no longer work for you. During 2023-24, employee referrals increased by 20% to 28,100. To encourage this, the ATO provides an online tool (google “report unpaid super”).
Last year, the ATO raised $659 million directly from super guarantee compliance activities, and this together with voluntary disclosures positively impacted the super balances of more than a million Australians. To further assist, from 1 July 2026 (subject to legislation), employers will be required to pay real-time employee super each and every payday.
Currently super is payable on a quarterly basis. So not only do employees forego earnings on contributions for up to 90 days, but they are also unlikely to check each quarter to confirm that their employer made the contribution that was promised on their weekly or fortnight payslip. Nor should they have to.
Automatically paying super each payday reduces the temptation and likelihood of unpaid super.
Let’s hope that the payday super changes get passed so that hard working Australians get the retirement benefits that they deserve.
by MARK DOUGLAS
FCPA
Managing Partner of Francis A Jones
www.faj.com.au