Harsher Laws for Unpaid Super
The Treasury Laws Amendment (2018 Measures No.4) Bill 2018 received Royal Assent on March 1 2019. These new laws give the ATO the power to enforce harsher penalties i.e. up to 12 months jail or large fines to directors of companies that do not pay their employee’s superannuation entitlements.
Company Directors have previously faced penalty for unpaid super however many employees entitlements remain unpaid. Underpaid superannuation entitlements in Australia for 2015-2016 were estimated at $5.9 billion in a recent Industry Super Australia report. In an effort to improve compliance with employer superannuation obligations, the government has approved these new measures.
This new law will enable the ATO to issue directions by written notice to employers who fail to pay, requiring it to pay an amount of outstanding Superannuation Guarantee Charge (SGC) within 21 days. It is an offence if the company does not comply with the direction and this can involve jail time.
There has been no change for PAYG.
Most companies are doing the right thing and obviously this will only affect a small number of businesses that have a history of non compliance, however becoming personally liable for your company’s SGC debt is serious enough but facing jail time and large fines would be devastating. A reminder to make super your first debt to pay and not your last.