Superannuation guarantee – voluntary disclosure and disputes with the Australian Taxation Office

The following publication provides an update re revenue collections by the Australian Taxation Office (ATO) involving voluntary disclosure and disputes in relation to employer superannuation liabilities.

By way of brief background, I think some context should be initially identified to better understand the ATO current priority collecting outstanding employer superannuation liabilities, given:

1. an environment of 13 interest rate rises in Australia from November 2020,
2. the historical impact of COVID on business cashflow in recent years and for some businesses
3. the subsequent partial or non compliance by some Australian businesses to accurately report and pay Superannuation Guarantee liabilities on time and pursuant to the Superannuation Guarantee (Administration) Act 1992 (Cth) (SGA 1992).

From time to time, mistakes can occur where employees superannuation liabilities are poorly recorded by businesses and also not paid on time.

In November 2023, the ATO provided updated metrics for the year ended 30 June 2023 re superannuation guarantee (SG) voluntary disclosure and disputes involving Australian employers.

These SG collections by the ATO are likely to only increase in 2024 given the ATO Corporate Plan announced in July 2023 (refer ATO website publication QC 73075).

Generally speaking, SG is determined by an employer based on the payment of salary and wages and other benefits paid to employees  – 10.5%  in 2022-23 and 11% in 2023-24.

The Good News

The good news is 94% of employers (some 915,000 employers and who employ 14.3 million employees) in this period are doing the right thing – ie employee SG expenses are recorded and paid on time (refer ATO website publication QC 70892 dated November 2023).

The ATO estimate a SG revenue collection gap is is 5.1% or A$3.6 billion of a total SG collection pool of say A$70 billion that should be collected by the ATO per annum.

The Bad News – for some Employers – what additional SG debts did the ATO collect in 2022-23

The additional total SG debt collected from employers by the ATO in 2022-23 was A$1.13 billion.

Of the others employers who don’t get their superannuation obligation accurately reported and paid on time, the important metrics recently reported by the ATO in 2022-23 were:

1. 56,000 employers made voluntary disclosures raising A$445 million and involving some 521,300 employees
2. from say a further 14,000 cases, and involving some 216,000 employees, the SG charge collected by the ATO was $379 million and $155 million in penalties (roughly penalties involving 50% of the SG charge)
3. from say 1,400 ATO initiated audit cases and some 40,500 employees, SG charge collected was $68 million and $2 million in penalties
4. 3,659 Director Penalty Notices were issued by the ATO.

In 2024, I suspect the ATO will only direct more resources to auditing and collecting more SG liabilities.

What to watch for in 2024

Businesses should review recorded superannuation liabilities that may exist or be unrecorded and any balances of unpaid superannuation liabilities in prior quarters.

Please reach out to me to discuss the SG obligation of your business and given the increased ATO focus over the coming months.