ATO falls short in superannuation compliance, report finds

You probably think the Australian Tax Office (ATO) is very good at making sure it gets its share of the money you earn. And so it should be. Its role is to collect tax and help ensure the money is distributed to the areas our governments deem necessary.

You might also expect that the ATO is good at ensuring employers who pay – or should pay – your superannuation, actually pass those funds on. After all, that is also part of the ATO’s remit.

It seems, however, that the ATO hasn’t been quite as diligent in keeping track of your super as it is at making sure you’ve paid enough tax. And it’s the federal government’s auditors who have come to that conclusion.

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The Australian National Audit Office (ANAO) has released a report, Addressing Superannuation Guarantee Non-Compliance, which is damning in its criticism of the ATO’s failure to ensure the collection of billions of dollars in super.

The report found the ATO had been only partly effective at best in three aspects of Superannuation Guarantee compliance: the ATO’s activities in addressing Superannuation Guarantee non-compliance, the ATO’s risk-based Superannuation Guarantee compliance framework, and the ATO’s compliance activities in achieving greater employer compliance with Superannuation Guarantee obligations.

Over time, the ATO’s activities have had only a small influence on reducing the Superannuation Guarantee gap (an estimate of non-compliance), the report concluded. The report tabled three corrective recommendations: implementing a preventative compliance strategy, use of enforcement and debt-recovery powers, and enhanced performance reporting.

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In response, the ATO has agreed to the first two of those recommendations but has only agreed “with qualification” to the third. The qualification revolves around the report’s request for “setting targets for measures, including the SG gap”.

The ATO’s response acknowledges that access to greater levels of real-time payroll data through ‘Single Touch Payroll’ will help it “effectively utilise these large volumes of data in real time to proactively improve compliance” but also said there were “complexities associated with the timing of legislated SG reporting obligations”.

While the ATO’s commitment to more preventative and proactive approaches to improve compliance is welcome, it will be of little comfort for those still waiting to receive the super owed to them.

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In 2021, the ATO estimated that the net SG gap in 2018-19 was $2.5 billion, but industry sources claim it’s a much higher figure.

ACTU assistant secretary Scott Connolly said Australian workers were “losing $5 billion per year through a system that allocates 13 full-time staff to the proactive policing of the theft of super nationally”.

Labor superannuation spokesman Stephen Jones said that, in government, his party would require the ATO to set tough and transparent targets to recover unpaid superannuation, and require those results to be reported to parliament annually.

But Industry Super Australia CEO Bernie Jones said more needed to be done. “Labor’s commitment to beef up ATO compliance and make it easier for workers to recover unpaid super is a step in the right direction, but it won’t amount to much until they go the next step to require employers to pay super with workers’ wages – just like all federal politicians get.”

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Written by Andrew Gigacz

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