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Unpaid super: Submisison to the ATO on its draft practice statement on penalty remission

  Published: 26 Aug 2021

Unpaid super affects more than a quarter of employees, averaging $1,700 per affected worker and costing them nearly $5 billion a year. It is young workers, those on low wages or working in construction, transport, hospitality and accommodation who are most likely to be underpaid super.

The impact of unpaid super is clear and long-lasting: less money to retire on, greater reliance on the age pension – a bill the taxpayer picks up – and for many, the risk that critical insurance lapses. Employers who fail to pay super gain an unfair advantage over other employers who meet their obligations to pay.

The government has progressed some important measures that help to address the unpaid super problem in recent years. Unfortunately, having done so the ATO’s proposed principles on remission of the additional super guarantee change (SGC) imposed under Part 7 of the Superannuation Guarantee (Administration) Act 1992 muddy the message that compliance is very important.

In ISA’s view, the ATO’s proposed approach to remission of Part 7 penalties will do little to address the problem of unpaid super because the principles:

  • Take a permissive approach to a mandatory obligation by framing the SG regime as one which encourages rather the requires employers to pay super
  • Fail to use penalties to deter non-compliance because the ATO will provide a full or partial waiver in all but the most egregious cases
  • Give guidance to employers on how to delay paying SG and receive a lower penalty in setting out which conduct will receive a waiver and in what amount.

*The above material, whilst correct at the time of publication may include references or statements which are no longer current.

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