December 11, 2023

Crackdown on Superannuation Guarantee

Superannuation Guarantee (SG) is a mandatory contribution employers in Australia make for their employees' retirement savings. Despite being a legal obligation, many Australian workers are cheated out of these essential savings, as evidenced by recent estimates by the Australian Taxation Office.

Underpayment and non-payment of SG

Over $3.6 billion in SG is yet to be paid to workers, with $1.8 billion attributed to hidden wages, off-the-books cash payments, undisclosed wages, and non-payment of super where employees are misclassified as contractors. These actions rob employees of their retirement savings and give fraudulent employers an unfair competitive advantage.


Late payment of SG                                             

Concerns over late payment of quarterly superannuation guarantee charges (SGC) have prompted the government to introduce Single Touch Payroll (STP). STP matches data reported by employers to superannuation funds and can identify late payments and incorrect reporting. Failing to meet SG deadlines attracts SGC and lodging a Superannuation Guarantee Statement.


Proposed legislation

The government plans to introduce legislation to bring harsher punishments to employers for 'wage theft' and other unfair practices. The new bill addresses casual employment, sham contracting, gig economy workers, and industrial manslaughter. These proposals demonstrate the government's commitment to protect employees' rights and ensure employers pay their share.


Recovery of payments

The Fair Work Ombudsman has been active in recovering underpaid SG amounts. The ombudsman has retrieved over $1 billion in back payments in the last two years. Most of these amounts were owed to workers of large corporations and universities. Misclassifying contractors leads to penalties for employers, further demonstrating the need for employers to adhere to SG laws.


Future changes

The government plans to introduce laws mandating employers to pay superannuation guarantees simultaneously as employee salary and wages from 1 July 2026. Two options for the timing of SG payments are under consideration: on the day salary and wages are paid or a 'due date' model. Currently, 62.6% of employers pay SG quarterly, 32.7% monthly, and 3.8% fortnightly or weekly.


Compliance with the Superannuation Guarantee is essential for employers to avoid significant financial penalties and damage to their reputation. Employers must classify their employees and ensure timely SG payments accurately. Contact Lead Advisory Group for guidance and support in achieving SG compliance. Compliance with the SG system is essential for protecting the financial well-being of Australian employees.

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