Announcement date
18 September 2024
Link to announcement
Payday superannuation design details to ensure super is paid on time | Treasury Ministers
Problem being addressed
Unpaid superannuation has significant negative impacts on individuals, by reducing superannuation savings and delaying retirement. In 2019-20, more than $3.3 billion in Superannuation Guarantee (SG) entitlements remained unpaid and owing to eligible employees. The Australian Taxation Office (ATO) is responsible for administering the SG scheme, including following up with employers where SG obligations go unpaid and administering the SG charge. However, due to the design of the SG system (including the frequency with which employers are required to pay SG, the operation of the SG charge, and limitations with the ATO’s IT capabilities to identify unpaid SG), many SG obligations remain unpaid for extended periods of time. This causes significant issues when employers enter liquidation without having paid their SG obligations.
Proposal
Three options were considered in the 2023 Impact Analysis: Unpaid Superannuation Guarantee Package (USG IA) to address the problem of unpaid SG:
Option 1: Maintain the status quo (no change).
Option 2: Investment in ATO data matching.
Option 3: Require SG to be paid alongside an employee’s salary and wages (on payday).
This IAE introduces an alteration to Option 3 as presented in the USG IA where the use of the ATO Small Business Superannuation Clearing House was one way to mitigate the potential risk of higher fees for employers. It is now proposed the ATO Small Business Superannuation Clearing House will be retired, with no new registrations accepted and impacted small business employers required to find an alternative clearing house to make contributions from 1 July 2026.
This change is expected to increase the average annual regulatory burden on affected employers by $1.2 million. This changes the average annual regulatory cost of selecting Option 2 and Option 3 from $135.6 million to $136.8 million.
Assessed Impact Analysis outcome
Impact Analysis Equivalent
Assessment comments
The Office of Impact Analysis (OIA) does not assess the quality of reviews and documents used in lieu of an Impact Analysis (IA). Impact Analysis Equivalents (IAE) are assessed by OIA for relevance to the recommended option(s) and for the coverage of the 7 Impact Analysis questions conducted.
For this IAE, the Treasury has drawn on the 2023 Impact Analysis: Unpaid Superannuation Guarantee Package along with additional analysis identifying the impacts of Retiring the ATO Small Business Superannuation Clearing House by the Department. The OIA assessed that the options analysed in the IAE materials are sufficiently relevant to the proposal.
Regulatory burden
The Treasury estimates these measures will result in an increase in average regulatory costs of $136.8 million per year, over ten years.