Prison time possible for employers who don’t pay super

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Prison time possible for employers who don’t pay super

Kelly O’Dwyer, the Minister for Revenue and Financial Services, has unveiled legislation that, potentially, would put non-super paying employers in prison if they don't comply with ATO directions.

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Kelly O’Dwyer, the Minister for Revenue and Financial Services, yesterday revealed draft legislation that significantly increases the penalties on employers who do not make the proper superannuation guarantee payments. 

“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. To embed ongoing compliance the ATO will also have the ability to require employers to undertake training,” Ms O’Dwyer said in a statement yesterday

The laws extend the new “Single Touch Payroll,” system, in which employers will report payments such as salaries, wages, pay as you go and superannuation payments directly to the Australian Tax Office via payroll software at the same time as they pay their employees. 

According to materials from the Treasury, the new legislation will give powers to the ATO to order employers to pay superannuation guarantee and undertake education on superannuation. 

Failure to comply with these directions can result in administrative or criminal penalties.

A person who commits a first offence is liable to a fine of up to 20 penalty units, is liable to a fine of up to 40 penalty units for a second offence, and is liable to a fine of up to 50 penalty units and/or imprisonment of 12 months for a third or subsequent offence.

One penalty unit is currently valued at $120 so a fine of 20 penalty units is currently valued at $2,400; the value of penalty units are reviewed every three years and the next review is due this year. 

The ATO will also be allowed to disclose more information about SG non-compliance to affected employees.

Further reading

Superannuation Guarantee Integrity Package
 
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