It’s official and serious!
New laws introducing penalties, including imprisonment up to 12 months, for non-compliance of superannuation guarantee obligations have been passed.
Earlier this month, Jotham Lian, in the Accountants Daily newsletter, reported that new legislation now allows the ATO commissioner to issue a direction to an employer to pay an outstanding super guarantee liability.
Failure to comply with this direction can result in criminal penalties.
The maximum penalty for the offence is 50 penalty units, imprisonment for 12 months, or both.
Plus, employers who receive direction from the commissioner must complete an approved education course.
The new legislation is awaiting Royal Assent, with the legislation to take effect from 1 April 2019, but will apply to SGC obligations arising from 1 July 2018.
This makes it vitally important that FROM NOW all directors, each quarter, ensure their business superannuation obligations have been accurately calculated and are paid on time. And if your accountant is not involved in calculating your super obligations, then it may be worthwhile having a conversation with them to ensure your super compliance systems are in order. Your accountant may be able to suggest solutions, like introducing a single touch payroll, to ease the compliance burden.
Accountants Daily RSM senior manager Tracey Dunn was reported in Lian’s article as saying that the new law might catch out small to medium-sized family businesses where a spouse or family member may be appointed as director without fully understanding their obligations regarding super payments.
“Obviously the criminal penalties will only apply to serious cases, but unfortunately in a lot of small businesses super guarantee payment are the first thing that goes (unpaid) and they are quite often behind because of cashflow issues so there will be a higher risk,” Ms Dunn said.
“For example, a husband runs a business and he is the brains of the business but the wife will be put in a position where she is a director. The accountant may discuss the director obligations with the husband but then rely on the husband to relay that to the wife and she may not ever fully understand what her risk is.
“They (the wives) now face a criminal penalty if, within a business, those compulsory superannuation guarantee payments aren’t made on time.”
Ms Dunn said she believed accountants had an important role to play in helping clients their clients understand the new risks.
“Accountants and advisers really need to ensure that when their clients employ staff, they are fully aware of the risk of non-compliance with super guarantee obligations,” she said.
Latest data from the ATO estimates unpaid super guarantee at $2.79 billion and these measures are a clear indication the Government is extremely serious about ensuring all employees receive their superannuation entitlements.