Unpaid superannuation - ATO not doing enough or quickly enough

The latest April Choice article from "Super Consumers Australia "manager Franco Morelli backs up why the system is outdated. I commented regarding this issue in 2017 to choice after this was a concern in two of our family members being ripped off by employers. At that time the response was to report to the ATO as it is not option for Choice to pursue at that stage. We had already filed the appropriate forms over many months and as the employer only had to contribute any small amount after the ATO contacted them this cancelled the complaint so the process and forms had to be renewed over and over. It took ATO 6 months to even start another process. So after 5 years the company was in liquidation and so the liquidators took there share and we were granted 4 cents in the dollar for our $5000 owing. Companies are rorting the system. Please note if any response to this topic it was not a lack of confronting the boss often to no avail. Retired since 2017.


You are not the only one that has happened to. The following topics may be of interest to you:


There are enough reports of this in the media that Choice might consider a VoiceYourChoice campaign to call attention to it for the next government. @BrendanMays?

Draft 1 - ‘Employers should be required to make their legislated superannuation contributions concurrently with each respective payroll’.

A decade ago before superstream it was more complex. If employers were required to make contributions with payroll the employee could track it, and if the deposits were tardy the employee could contact the ATO for assistance before the employer went into administration, ceased trading, or went bankrupt, and before the employee was significantly disadvantaged with no way to recoup.

A less attractive alternative may be to establish a mandatory insurance scheme guaranteeing super payments.


There is no excuse for any business not to make it’s super payments as you suggest per pay period.

Similar failings in our legislation also enable employers to fall short when it comes to other employee entitlements including payment of accrued leave, unpaid wages, termination payments etc.

A responsible business/employer will be able to show it’s accounting accruals each month for all unpaid employee entitlements. Perhaps the government needs to legislate that the full funds required to cover these entitlements are held separately in trust, and not available to the business to meet any other commitments. Reconciliation on a monthly basis at risk of criminal penalty might be the teeth needed.

For the alternative of some form of mandatory insurance.
It may take some effort to convince business, knowing many do the right thing or the tax payer always under pressure, to cover the failings of others for short payment of super entitlements.


I was a bit confused by what you meant by this because at first I thought: There is an excuse, namely that they are not legally required to.

I don’t see a major problem with changing the law to require super payments to be made in lockstep with salary payments - as long as it is phased in / with advance notice.

Hmmm. I think it depends on your perspective. :wink: Some things are more complex now that we have superstream.

The bottom line though with superstream is that it should mean that there is an independent party monitoring for when a company misses its first super payment (as well as monitoring by government). That doesn’t exclude completely the possibility that employees are out of pocket but it minimises the losses to one payment period - and that’s a good thing.

One additional observation on superstream: for some small and medium-sized employers, there is a cost per transaction in using superstream. Hence, forcing the company to make super payments in lockstep with salary has a real and measurable cost.

To elaborate on that, if an employer is using the government-run Small Business Superannuation Clearing House (SBSCH) then I believe there is no transaction cost but then of course there is only one set of eyes (the government) rather than two. There are eligibility requirements that an employer has to meet in order to use the SBSCH.

A large employer, who won’t be eligible to use the SBSCH, will choose a plan with the superstream provider that is more suited to a company with a mass of employees and a mass of transactions i.e. not a plan that hits the employer per transaction (but more likely a fixed large charge per period).

That has a real cost though. Imagine that I just became an employee of company X. If I stay 10(?) or 15(?) years then I will be entitled to long service leave. So are they required to put money away incrementally, and lose the use of the money for a decade or more, on the off chance that I don’t move on before reaching that entitlement?

Same issue with termination payments. It would tie up an unreasonable amount of cash (in my opinion) if a company had to make financial provision for making its entire workforce redundant at any time.

The situation with annual leave is not as dire but I know some employees who never quite take their annual leave (always something important going on) so that they could be several years behind.

So there is room for argument about what is an actual entitlement (you’ve done the work, you are entitled to be paid, and super on top of that) and what are accruing entitlements, some very theoretical.

The starting point would simply be to legislate to require an employer to show in its accounts its provisions for employee entitlements and have that audited as reasonably and correctly calculated. Since every company is required to form a reasonable belief that it will be able to meet its financial obligations as and when they become due, a company that is in real strife will be detected sooner.


9 posts were merged into an existing topic: LSL and other entitlements of employees

This talk about long service leave is drifting off course somewhat.

Now being an employee, and never an employer, my understanding is that the employer has to do three things in regard to employee pay.

  1. Pay the employee an amount of gross pay minus PAYG tax.
  2. Send the ATO the tax taken out as PAYG.
  3. Send the Super Guarantee amount, currently 10% of gross salary to the employee’s fund. And if they don’t, the SGC will apply payable to the ATO.

Seems for some companies, the third task seems optional, and the ATO seems to let the companies weasel out of paying SGC as well, if they can claim any sort of reason for the delay.
If the ATO treated the payment of 3. with same vigour as they do 2. then employees would be better off if they happened to work for a dodgy company.


For unpaid Super the ATO fails workers when they fail to take decisive action against employers for their failure to adhere to the Law. I believe that action, or lack of, by the ATO is based on the political parties who are in charge at the time. Lassiez-faire is not a way to go in my opinion.


Theoretically, due to the range of penalties that may apply, the payment of super contributions on time should be a high priority for an employer with cashflow issues.

As is often the case, theory and practice don’t match up. Two reasons for the disconnect are;

  1. There might be no immediate direct consequences of non-payment/underpayment of super. With other expenses e.g. rent, electricity, trading stock, loan repayments, wages etc. non-payment can result in serious disruptions to business operations; and
  2. Super payments are made to a third party rather than the ultimate beneficiary i.e. the employee, so it might not be immediately obvious to the beneficiary that the correct amount has not been paid.

It is in the employee’s best interest to monitor their super accounts regularly to quickly identify any unpaid or underpaid amounts and to promptly act when problems are identified.

The ATO is probably limited in the action it can take in cases where they are not notified of problems by an one or more employees. Also, any action the ATO can take is slowed down if they have to audit an extended period of underpayments.

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If that were factual, how come so many businesses fail owing more than they have cash and assets to repay?

Is the suggestion here the fundamental tenant “required to form a reasonable belief” is a flawed concept?

Is there merit in the following?

Not if the provision is accessible for use against general expenditure?
Not if the regularity of audit is less than monthly?

Of interest is that some larger companies do set aside provisions explicitly for unpaid employee entitlements. The evidence is in the detailed annual financial statements accompanying the annual reports. It still does not prevent those with financial control acting otherwise. No comment on ASIC’s powers to intimidate directors and appointed company officers with a wet feather.

The ATO advice may interest some readers.

and whether ‘Fair Work’ is fair in context?

and a government report from 2010 that reinforces

as evidenced by a repetitious This is largely a policy matter for Government’s consideration

Having had ‘the experience’ it generally takes 3 to 5 years from ‘an idea’ to make substantive changes or get new projects through in Canberra, so the government of the day when any report is submitted may or may not be incidental to what happens should government change along the way. From ‘the idea’ to enacting comparatively minor responses can be more timely.


The fundamental flaw is that we cannot know the future with certainty. The belief may have been reasonable but then the future came along with other ideas.

However we digress to employee entitlements in general, which are more complex to legislate for, or to find reasonable solutions for.

If super were payable at the same time as salary (and after all the super payment is calculated directly from the salary payment, and is associated with it), that might be good enough.

That means that super would be payable weekly for employees who are paid weekly i.e. 13 times a quarter (give or take) - and any business that can’t pay super in a week’s time probably can’t pay the underlying salary either.


Enough said then. Solution accepted. :white_check_mark:
Unfortunately problem not solved.


Two revelations that should have many consumers concerned about their entitlements.
The size of the losses and paltry success of the ATO in recovering unpaid contributions.

It leaves open the question if our regulators have adequate legislation for enforcement? A further suggestion is whether the risk of penalties to the individuals who hold the financial accountability in a business are not an effective deterrent.


The solution is routinely mentioned, that being to mandate super contributions coincide with payroll so a failure would be visible very quickly, not up to 3 months or even later, sometimes by when the business has closed or gone into administration or been voluntarily wound up without assets.

Separately, common sense suggests unpaid super implies businesses wilfully doing the wrong thing or because they have insurmountable cash flow problems and take care of themselves as their priorities, and government oversight is inadequate when that happens.

Unpaid super along with outstanding wages should be the first in the queue for assets ahead of the ATO and taxes. In the case of P/Ls the directors should ‘own’ the debt, for independent operators the ‘owner’ would own it, and if a debt cannot be timely satisfied in whole it should minimally be taken in a HECS-like manner, concept not details here, and accepted as arguable.


Disclosure alert for potential conflict of interest, or just self interest.

The New Daily is owned by Industry Super Holdings, itself owned by a number of Super funds, who of course would be keen to see every available dollar without exception sent into their funds for their investing, and fee generation.

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Are you suggesting every available dollar that rightfully should have found its way to super that has not because of ‘business doing the wrong thing’ eg not sending it in, somewhat mitigates the net reality because of TheNewDaily’s ownership?

BTW, TheNewDaily is quite upfront about their structure and staff, and backing. It is not like industry super funds (default options) are not among the highest performers and regardless they are not touting their wares.


No, just pointing out that the source of an article that comes near to claiming a huge problem in employers not paying Super comes from a site that is owned by Super funds.

Wear your sceptic glasses, just as you would reading many articles on commercial sites to be aware of possible sources of bias, promotion, advertorial, etc.

Clearly the Government doesn’t see a big problem, since it would have been fixed years ago. It’s not revenue they need to try to run a public service.
The ATO seemingly couldn’t care less and given the chance would like to hand over the role to some other department, in my view. It’s not tax to be collected.
And plently of employers seem to take a view that it is just another impost on their costs to be handled when they get forced to.

And with successive governments supporting winding up (or at least winding down) aged pension to be replaced by super, employees have a rightful stake in getting what is legislated.

Another source (Choice), details vary but.

[Unpaid super is a major problem, and a surprisingly common one. In the 2018/19 financial year, the Australian Taxation Office (ATO) estimated that it cost Australians $2.5 billion.](https://www.choice.com.au/money/financial-planning-and-investing/superannuation/articles/unpaid-super)

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Which government of the previous 7 years of government do we need to ask that of? Why may it have not been acted on more vigorously? One only needs to ask where the benefit of not paying due amounts for employees super may have gone.

The money not paid into super was not also paid to employees, despite it forming part of their wage or salary agreement. IE it’s equivalent to a 9.5% or greater pay cut depending on which of recent years we look to. Even the Government is short changed by 15%, the tax rate applicable to SG contributions on receipt by the super fund.

I wonder how any employee would respond if they were short paid every period.