Announcement date
2 May 2023
Link to announcement
Introducing payday s...~https://ministers.treasury.gov.au/ministers/stephen-jones-2022/media-releases/introducing-payday-super
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
- Grant funding to the Australian Taxation Office (ATO) to develop capabilities to automatically match Superannuation Guarantee (SG) contributions data, which would enable near-real time visibility of any shortfalls in SG payments.
- Require that SG contributions are paid alongside wages instead of quarterly and
- align the SG compliance framework with this more frequent payment schedule.
Assessed Impact Analysis outcome
Adequate
Assessment comments
The overall IA was of good quality but would have benefitted from a stronger consultation process. However, OIA notes Treasury’s comment in their certification letter that the market sensitivity of the proposed change has limited the ability for Treasury to consult earlier due to the risk of unacceptable market advantage, particularly with the superannuation clearing house sector. OIA further notes, the Impact Analysis states that extensive post-decision consultation would be required should the recommended options be agreed by Government, including with employers, superannuation funds, payroll providers and clearing houses.
Regulatory burden
The Department of the Treasury estimates a net increase in regulatory costs of $135.6 million per year, averaged over ten years.