Report finds tax office failed to collect billions in unpaid super owed to workers

Industry Super Australia

Report finds the tax office failed to collect billions owed to workers

Yet another government report has found that loose laws and ‘light touch’ compliance is costing Australians billions in unpaid super.

The auditor has found the Australian Tax Office’s reluctance to ‘proactively’ investigate unpaid super claims has led to it collecting a dismal 15% of what Australian workers are owed. Instead, workers are forced to make reports and do all the heavy lifting.

The ATO themselves have admitted that its compliance has next to no impact in reducing how much unpaid super there is – which ISA estimates has climbed to $5 billion a year.

With compliance failing to make a dent in the problem politicians now need to address it at its source and commit to mandating that super is paid with wages, rather than the legislated four times a year now.

The audit office’s report is a damning indictment on the tax office compliance activity, finding it failed to use all its collection powers, does not have enough resources to proactively hunt those ripping workers off or utilise real time data and may have been acting illegally when it gave almost all employers a free pass.

From 2015 to 2017 the ATO ran a practical amnesty where it would not fine employers who admitted they had underpaid super to staff and had made some restitution. This ‘light touch’ approach to compliance was stopped when it was found it could be an illegal use of the ATO’s powers.

The audit office recommended the ATO use a bottom-up approach also used by ISA and which indicates an actual annual unpaid super bill of $5 billion – almost double the ATO’s $2.9 billion estimate.

Labor’s plan for the ATO to hit transparent unpaid super recovery targets should help lift the compliance regime and the policy to include super in the National Employment Standard will make it far easier for workers or their representatives to recoup the money.

But the problem needs to be stamped out at the source by mandating that super is paid with wages.

Quarterly payments can be exploited by those deliberately short-changing workers, makes it harder for the ATO to chase debt and difficult for workers to keep track of super payments.

Comments attributable to Industry Super Australia chief executive Bernie Dean:

“It’s yet another government report showing how ordinary workers are missing out on billions of dollars they’ve earned because of old-fashioned laws and no effective enforcement.”

“Along with our federal politicians who could easily fix this problem at its source, the ATO needs to do better than just recovering a dismal 15% of the unpaid super bill each year.”

“It is little wonder the regulator performs so badly considering the auditor general’s finding that the ATO does little proactive enforcement, instead relying on workers to make a report and do all the heavy lifting.”

“Labor’s commitment to beef up ATO compliance and make it easier for workers to recover unpaid super is a step in the right direction, but it won’t amount to much until they go the next step to require employers to pay super with workers’ wages- just like all federal politicians get.”

/Public Release.