On 2 August 2013, the Federal Labor Government announced that it will provide additional resources to the Australian Taxation Office (ATO) for the purpose of detecting and collecting unpaid employer superannuation contributions.
Underpaying superannuation or making late payments of superannuation (even one day late) will generate significant penalties for employers. As well as paying to the employee the shortfall amount, the employer must also pay a penalty equal to the shortfall, plus interest at 10% per annum and an administration fee of $20 per employee per quarter. Further, employers lose the tax deduction that would normally be available to superannuation payments made. The total financial costs to businesses found to underpay their super or pay it late is substantial and there is no discretion for the ATO to waiver or reduce these penalties.
Recent changes to the superannuation legislation also mean that company Directors may be held personally liable for any unpaid superannuation contributions as well as the associated interest and administration charges associated with the shortfalls.
In the past the ATO has regularly undertaken reviews of superannuation systems across a variety of industries and business sizes. The penalties imposed have generated considerable revenue for the ATO. With the increased resources now to be provided to the ATO by the Government, it can only be assumed that the regularity and size of these reviews will be increased.
As such, considering the potential financial penalties and increased scrutiny, it is crucial that employers take the opportunity now to review their internal systems and ensure that superannuation payments are being made correctly and consistently.
Moore Stephens regularly conducts Superannuation Reviews in businesses, aimed at assessing whether superannuation guarantee obligations are correctly adhered to and whether appropriate systems, policies and procedures are in place.
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