Acting Opposition Leader Tanya Plibersek and Prime Minister Malcolm Turnbull during Question Time at Parliament House in Canberra on Wednesday 2 December 2015. Photo: Alex EllinghausenThere is a $2.85 billion-a-year shortfall in what employers should be paying their employees in super.
For the first time, the Tax Office has estimated the shortfall by comparing what employers should be paying with how much actually ends up in the super funds of their employees.
The estimate comes after a report by the Senate inquiry into unpaid super, released in May 2017, found the Tax Office’s approach to unpaid super to be “inadequate” and “problematic”.
Half of the inquiry’s recommendations were aimed at improving the Tax Office’s monitoring and compliance efforts.
The Tax Office estimates the compulsory super gap to be 5.2 per cent, or $2.85 billion, of the total estimated $54.78 billion that employers were required to pay in 2014-15.
Employers are legally required to pay 9.5 per cent in superannuation to every employee over the age of 18 earning more than $450, gross, a month.
Research released earlier this year by Phil Gallagher, a special adviser at Industry Super , the umbrella group for industry super funds, showed the underpayment and non-payment of super varies greatly across the country.
The research fund the federal electorate of Sydney, held by Labor’s Tanya Plibersek, had more than 37,000 people who are not receiving their super entitlements – either non-payment and underpayment of compulsory super.
That made the seat the worst in the country, ranked as a percentage of the electorate for non-payment or underpayment of super.
The seats of Fowler and Werriwa in Sydney’s south-west had more than one in three people not receiving their correct super guarantee entitlement.
Mallee was the only Victorian seat in the top 10 of the worst federal seats for underpayment or non-payment of super.
“Superannuation has a vital role in providing for people’s retirement and any non-payment is of concern,” ATO deputy commissioner James O’Halloran said.
“We encourage people to report instances of non-payment to us and we respond to every one of the approximately 20,000 reports of possible non-payment of the super guarantee from employees or former employees we receive each year.
“In addition to following up all reports of unpaid super guarantee, we are increasing our proactive super guarantee case work by one-third this financial year,” Mr O’Halloran said.
Industry Super has criticised the Tax Office for not doing more to ensure that employers meet their legal obligations.
It has estimated the amount of unpaid super at $5.6 billion – twice that of the Tax Office.
Industry Super said the problem with relying on employee complaints is many employees are reluctant to involve the Tax Office to investigate their employer because they don’t want to jeopardise their jobs.