Legislation to close a loophole that lets employers rip off workers who try and do the right thing by contributing to their super through salary sacrifice is welcome, but doesn’t go far enough Industry Super Australia says.
Industry Super Australia (ISA) has published its submission to the Treasury Laws Amendment (Tax Integrity and Other Measures No 1.) Bill 2019, which seeks to close a loophole that has seen employers able to count a worker’s salary sacrifice contribution to their super as the employer’s own contribution.
ISA analysis of 2016-17 ATO data reveals that more than 370,000 Australian workers are currently missing out on $1.5 billion in super entitlements each year because of this loophole.
Despite the previous Parliament considering legislation to close this loophole, for some reason it was never brought on for debate in the Senate, meaning workers are continuing to miss out on their retirement savings.
ISA has called on the Government to address the bigger issue of unpaid super, with one in three workers currently missing out on close to $6 billion in super because dodgy bosses are holding on to the money for themselves, rather than paying it into their employees super account.
This happens because under the current law, employers are only required to pay super into a workers account quarterly, making it easy for them to hang on to the money and put it back into their business, or only pay a proportion of what the worker is entitled to.
While the salary sacrifice loophole is a serious issue and must be fixed, the proportion of workers impacted by this loophole is around 17 per cent of the total number of workers who are not being paid their legal super entitlements.
In other words, the Government’s Bill only fixes 17 per cent of the problem.
ISA is calling on the Government to take action on the bigger problem of unpaid super, by committing to change the law and make super payable on pay day.
Federal politicians currently receive their super on pay day, it’s time there was one rule for everyone.
ISA’s submission can be accessed here.
