Nowhere to hide as ATO empowered to chase super dodgers
The tax office will gain an unprecedented view of small business superannuation payments after the government secured legislation extending single-touch payroll and opening up new penalties for those who don't pay their workers the superannuation guarantee.
But while the changes are designed to shore up the multi-billion dollar superannuation payments shortfall, they won't address the deeper concerns smaller operators have about the system, says the country's peak small business organisation.
The passing of a fourth set of amendments to Treasury Laws last week secured two significant changes affecting how business super payments are recorded.
The extension of single-touch payroll to all employers by July 1, 2019 means businesses will have to report salary and superannuation payments to the ATO in real time.
New tax office powers will mean the tax commissioner will be able to order an employer to pay an outstanding super guarantee amount, or direct employers and their staff to complete education courses if they fail to pay.
Failure to abide by a direction to pay super could result in a fine of up to $10,500 or 12 months imprisonment.
This adds to the tax office's powers to chase outstanding super, which includes the ability to issue a director penalty notice and charge late payment fees.
The Council of Small Business Australia says it supports employers being pursued for outstanding super, but says the move still means smaller operators have to spend hours on complicated paperwork.
"We shouldn’t be collecting it in the first place. If they changed it [super] and put it in with PAYG, we wouldn’t be having this conversation," says chief executive Peter Strong.
Strong argues employers should be able to combine super payments and PAYG tax amounts and deliver these to the ATO in one go, with workers then being able to nominate where their super goes.
As it stands, small businesses struggle to deal with complicated superannuation fund administration and the whole payments process is inefficient, he says.
Meanwhile, the tax office already has the powers to direct businesses to pay outstanding PAYG amounts.
Single-touch payroll is designed to streamline payroll processes by allowing real-time reporting online, but the small business community has been concerned about the time and money the transition could take in practice.
But there may still be work to do to prepare businesses for this change, with accounting platform Xero finding last week that 37 per cent of more than 200 businesses it surveyed had not thought about moving to a digital payroll program ahead of the new rules coming in.
The new ATO powers have been in the pipeline since the start of 2018 and formed part of a suite of measures designed to fight the black economy.
A new approach
The Australian Institute of Superannuation Trustees (AIST) has welcomed the new approach because it "shifts the burden" of chasing unpaid super from employees, who used to have to report outstanding amounts, to the tax office.
“Workers have suffered, while non-compliant employers have had an unfair advantage over the majority of employers who are good corporate citizens,” AIST chief executive Eva Scheerlinck said in a statement last week.
But Strong argues the best way to ensure employers aren't using superannuation guarantee amounts elsewhere is to force them to pay their tax and super in one sum at the same time to the ATO.
"It then removes the temptation to use that money elsewhere," he says.