Greater SG awareness to drive further spike in SGC penalties
Super guarantee charge penalties are likely to rise further this financial year with high-profile underpayment cases prompting employees to check both their wages and super, says RSM Australia.
RSM Australia national tax technical director Liam Telford said with superannuation guarantee payments remaining firmly on the ATO’s radar, it is critical employers ensure they are accurately paying their employees.
The ATO recently reported that a total of $973 million in superannuation guarantee charge (SGC) liabilities were raised from ATO compliance actions and employer disclosures of unpaid super.
The ATO finalised approximately 14,000 SG cases during the financial year, with around 90 per cent of these initiated by employees.
Mr Telford said with the ATO increasingly leveraging its single touch payroll data and listing SG compliance as a key focus area in its annual report, there is likely to be a further increase in SGC penalties this financial year.
“The ATO have the single touch payroll data at their disposal and they also have the hotline that allows aggrieved employees to contact them so this is something that tax practitioners and employers should be paying close attention to,” he said.
Mr Telford said some of the recent reports of wages and SG underpayment by larger corporate taxpayers are prompting employees to check they’re being paid the correct amount of SG and report cases of non-compliance to the ATO.
The Fair Work Ombudsman (FWO) reported last month that it had recovered $509 million in underpaid wages for 251,475 workers during the 2022–23 year.
More than half of the recoveries by the FWO came from large corporate and university employers who together back paid more than $317 million to more than 160,000 underpaid employees last financial year.
Mr Telford said employers needed to get the payment of both wages and SG correct, with the underpayment of super one of the most heavily penalised tax obligations.
“The exposure arising from the underpayment of superannuation can amount to between five to seven times the actual shortfall,” he warned.
“That’s not just the difference between ordinary time earnings and salary and wages but a combination of interest, administrative penalties, Part 7 penalty and also the loss of tax deduction,” he said.
The ATO recently stated in its annual report that its expanded use of data matching between STP data and superannuation fund data would enable it to intervene in the non-payment and underpayment of super much more rapidly.
“This work will continue in 2023–24, to enable earlier intervention by the ATO with employers that are not meeting their obligations,” the Tax Office said.
“Our focus on expanding the use of data to improve super guarantee integrity in general will also continue in 2023–24.”
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