ATO Late Employee Superannuation Contribution Crackdown

Overview:

Businesses across the country are facing increasing scrutiny from the Australian Taxation Office (ATO) as it seeks to act against employers who are not paying their employees’ super contributions on time, targeting overdue payments - as little as one or two days late.

Headlined by the recent news that Bunnings has paid $6.1 million to tens of thousands of workers after underpaying their superannuation for eight years, in recent months the ATO has been working diligently to examine the superannuation records of more than 400,000 companies as it seeks to combat late and non-payments of employee super entitlements.

The crackdown follows the recent expansion of Single Touch Payroll (STP) regime in Australia, which came into effect on 1 July 2019 and has provided the ATO with enhanced and more timely data about employee payments, including superannuation, allowing it to be more proactive in detecting non-compliance. The ATO’s activity is expected to escalate as it continues to wade through the abundance of data that is flowing into its systems, following the STP changes.

STP compliance remains a challenge for many small businesses, with ATO data suggesting that just over a third of those businesses required to become compliant have done so to date. Smaller employers without digital payroll software face the biggest hurdles, as the new regime requires businesses to report using a cloud-based platform rather than traditional desktop platforms.

Anita Allan, Perks Director, Accounting affirms that this crackdown by the ATO highlights the benefit of ensuring you are properly utilising your accounting system to flag payment due dates, with the payment set a few weeks before the ATO requires.  

“In many cases, non-compliance is accidental; however, the consequences can be quite severe. It pays for small business owners to review their processes to ensure they allow enough time for the funds to clear, whether they use the ATO clearing house or any other clearing house,” mentions Anita.

“This can take over a week, so it’s important to submit payments well in advance to avoid hefty fines as the ATO scrutiny on superannuation payments continues.”

For employers, particularly small business owners, this increase of scrutiny by the ATO also emphasises a need to ensure that your cashflow caters for these necessary payments to be made on time and your records up to date. Speak to your accounting adviser about solutions that will help you maintain a regular cashflow to keep on top of mandatory expenses. If your business is quite seasonal, it’s worth considering a short-term cashflow loan to keep you up to date with employee super contributions and the like during the months where revenue is lower.