Employers who defy orders to pay superannuation to their employees will face jail terms of up to 12 months under draft legislation unveiled today by the Turnbull Government.
The Minister for Revenue and Financial Services, Kelly O’Dwyer, said the draft laws would extend the “Single Touch Payroll” technology to all employers from July 1, 2019.
The ATO says that the Single Touch systeminvolves employers reporting payments such as salaries and wages, pay as you go (PAYG) withholding and super information at the same time they pay their employees.
For employers with 20 or more employees, Single Touch Payroll reporting starts from July 1, 2018, subject to the legislation being passed in the federal parliament.
Single Touch Payroll will extend to employers with 19 or less employees from 1 July 2019.
Minister O’Dwyer said the combined measures will provide the ATO with more timely information to “support earlier detection and proactive prevention of non-payment of superannuation that is rightfully owed to employees”.
She said the government’s commitment to a Director Identification Number will help identify those directors who are “robbing their employees of their superannuation”.
“There will now be serious consequences for employers who break the law.
“The ATO will have a suite of enforcement and collection tools, including strengthened arrangements for director penalty notices and security deposits for superannuation and other tax-related liabilities.
“And, in cases where employers defy directions to pay their superannuation guarantee liabilities, the ATO will be able for the first time to apply for court-ordered penalties, including up to 12 months imprisonment.”
In cases where employers fail to comply with their SG obligations, the legislation allow the ATO to issue directions to pay unpaid SG and undertake SG education courses.
It will introduce criminal penalties for failure to comply with a direction to pay and allow the ATO to disclose more information about SG non-compliance to affected employees.
The ATO Commissioner will only issue directions relating to “serious contraventions” by employers whose actions are “consistent with an ongoing and intentional disregard of those obligations”.
The commissioner will be required to consider the employer’s history of paying the superannuation guarantee charge; whether the amount of unpaid is substantial, having regard to the size and nature of the employer’s business; and steps taken to discharge the unpaid liability.
The government will receive submissions on the draft legislation – which was flagged last year – until February 16.