Unpaid superannuation - ATO not doing enough or quickly enough

There is change coming, although years off. This saga seem too common even if it could only be counted in the ‘ones’. Previous governments felt requiring businesses to do the right thing was red tape or some sort of imposition, even though many businesses did not do the right thing.

Buried in the article it states From July 1 2026, employers must pay their employees’ super on the same day that they pay salary. Why giving employers 3 years to do what should be a trivial change remains unknown, but a step ahead it will be.

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Unpaid super from employers is not really of much concern for the ATO.

It is not tax revenue. They collect it but pass it on to super funds.

Now that the Gov has given them money specifically to develop systems to change the collection from quarterly to every pay day as per PAYG income tax, then they will work on systems change. That takes time.

I once was privy to an agency that told the user community their OS would be retired 5 years hence. At the 5 years mark the community rebelled they needed 2 more years. After those 2 years a smaller but vocal community still bleated they did not have enough time. Another year and they were finally cut off.

Another user community from another place funded an emulator that could run their old to be retired OS atop the new and very different OS - possible in the days prior to OSes being expected to provide many services beyond run codes and getting out of their way. An application suite running on an OS running on an emulator hosted on another OS is a thing of beauty :roll_eyes:

After watching that debacle and a few similar others I am of the mindset to put ‘them’ under pressure from the beginning because it might (not always will) get things moving soon than beginning years after the deadline :wink:

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I had a few frustrating years starting around 1997 trying to get management to let me start upgrading IBM mainframe systems software to be Y2K compliant.
The excuse was we don’t have the budget for that, or other new systems would replace the existing ones, so don’t bother.
Well when the crap hit the fan in 1999 that there is just one year left before Armageddon hits and your business falls over, it was how quickly can you upgrade those systems Gregr?.
Well it ended up costing that company ten times as much to get the work done as it would have if done in a calm measured way, which in large systems does take years.

For regular contributions (super guarantee payments) a tax of 15% is paid to the ATO by the superfund. The rate is 30% if one’s annual income is above $250k. Hence it’s in the best interests of the national budget that the ATO ensures the payments are made.

Super guarantee payments are usually made directly by the employer to the super fund.

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Three years does seem a long time, given that GST was up an running in less than two years after being announced.

The Government has recognised that the current SG system will need to be modified before the payday contributions can be introduced.

It is proposed that consultation be undertaken in the upcoming year with a finalised proposal to be included in the May 2024 budget. From there, the next step is to introduce legislation and hopefully get it through parliament. Once law, the ATO, super funds, clearing houses and payroll software providers can start working on updating their systems and the ATO can provide information to employers.

What can seem trivial when looking from one angle can be reasonable complex when looking from other angles.

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I think it is fairly easy to say that when

a) you don’t have to do the work, and
b) you aren’t familiar at all with the software involved.

It may make more sense to be generous in the allocation of time - and then enforce it when the 3 years is up - rather than be unreasonable in the allocation of time and have to keep extending (as they have done for other measures).

Most medium and large businesses would be using payroll software. A lot of those are on annual release cycles (need to pick up whatever crazy tax changes are kicking in each year, and cannot release until the ATO has provided those details, which in turn depends on the government, which sometimes depends on the parliament i.e. measure “announced” by the government but still fighting to get it through the parliament).

Then add in software changes and capacity changes at the various SuperStream providers.

With several of these impositions, the government also has phased it in so that large companies have fewer years than smaller companies. That might be a compromise position.

The government itself has to make changes i.e. for those businesses using the SBSCH and also on the surveillance and enforcement side. It would be severely embarrassing if they said “deadline July 1, 2024” and then missed their own deadline.

… by which I would assume … employer must initiate the transaction - because these days with SuperStream it actually takes longer for the money to hit the super fund (more parties involved, more steps, more delays) … assuming of course that the super is paid by the employer at all (which is the “problem” they are attempting to solve).

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ATO so weak after lodging necessary forms for almost and waiting 8 years complaints regarding unpaid super. Even declared bankruptcy so the liquidated took over. As usual superannuation is the last attempt after the creditors and the lawyers have been paid.$5000 was owed plus interest over that period. After 8 years the final amount was calculated at 10cents in the dollar.
Another family member has not received $40,000 superannuation owed from his previous employer since lodging with the ATO in 2013. Calls to ATO gets no answers just its still pending.

They do and it would be programmed to do 3 month superannuation payment periods at the moment. While a layperson might think it is easy to change programs from 3 months to pay cycles, it won’t be the case and in some circumstances will be an expensive and time consuming exercise.

The Qld government found out how costs can quickly blow out with trying to do, what one might think, vare relatively straightforward changes to payroll software.

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And it doesn’t go down well if the payroll software breaks on an upgrade and no employee can get paid (actual pay, never mind about super). So it would be as well to have a controlled, organised upgrade plan - not one imposed with inadequate notice by the government because this is a “trivial change” and should be done by July 1, 2023. :rofl:

At this stage … does the government need to legislate in order to make this change and if so has the legislation even passed the parliament??? Or is this just announceware? (What payroll software company is going to make code changes on the basis of announceware?)

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Which products cannot already accommodate what is being asked, and which ones can?

There are large business which do transfer to the super funds more often. Monthly based on my prior employment experience. Which says there are payroll systems which do provide for a more frequent payment to super funds.

Of note is that every pay docket (typically digitally generated these days) reports the deduction for super for each employee separately, pay by pay. Mine going back many years also provided a running tally of the year to date for super. The systems know exactly how much should be transferred to each SG account at a very detailed level. If not already an option in a payroll system, it’s but one report away. The timeline for compliance is very generous.

Perhaps if more businesses had been doing the right thing by employees the changes now required would not be.

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Yes, because it has to maintain the accruals in preparation for the quarterly remit (and for other purposes).

A semi-serious suggestion … perhaps the government should ban weekly pay. Somewhere between weekly pay and quarterly remittance of super, they could meet in the middle. Monthly seems somewhat reasonable.

Well indeed. As always. There are some who do not do the right thing - and all the rest of us pay the cost of the government’s response. Applies to businesses and to individuals.

Yes there are and their accounting system has been programmed for less than 3 months compulsory superannuation payments. The 3 months is a maximum period, not a prescribed payment period. Some businesses may chose less than 3 months. I have worked for employers which pay quarterly and monthly. It is up to the employer/employees to agree to less than 3 month payments. The monthly payment was in the EBA.

Some might accommodate a straightforward superannuation payment period change (might be as simple as changing dates or payment periods) Others will require coding/programming work and thorough testing. Any changes need to consider businesses which require coding/programming work and time taken to complete the task. Any change won’t be quick as there will be many businesses seeking the same outsourced resources to have changes made.

Like the Qld government example, something the layperson might think should be very easy, ends up being very costly (financially and time) to those payroll systems where changes aren’t simple.

I have worked for a large organisation where special projects have been set up to make the smallest of changes to the payroll system. These projects run into many months, if not years for full testing, and require outsourcing/coding specialists to complete tasks in the project.

The ATO also has this to say:

Some super funds, awards and contracts require you to pay super more regularly than quarterly.

Meeting the SG contribution payment dates does not ensure compliance with other super funds, awards and contracts.

You should check the contractual obligations you have with your super fund, award or contract to ensure super contributions are paid on time.

I would think that “award” is most likely to be relevant in the above.

It also rather bogusly says:

SG payments made to a commercial clearing house before the SG due date may not reach the super fund until after the due date.

Your employee’s super contribution is only considered ‘paid’ on the date it’s received by the super fund. Not the date it’s received by the clearing house.

Note: It is important that you leave enough time for your SG payments to reach the super fund and allow for their processing timeframes.

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I suspect there are many assumptions that payroll software is an inflexible unitary beast. In reality there are myriad variables such as salary sacrifice, pay, tax, and something about super.

I do not discount crap software that is spaghetti code makes things hard, but the change to cause super to be deposited when payroll is generated should be trivial, and because of all the variations already in the system it should be a variable setting. Reality is there is a lot of crap software that is spaghetti code.

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Those statements are correct in relation to a commercial clearing house.

However different rules apply for the ATO run ‘Small Business Superannuation Clearing House’ (SBSCH). Contributions made via the SBSCH are deemed to be received by the fund on the date the funds are accepted by the SBSCH.

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Simply, compulsory superannuation was in lieu of pay rises. Why is it possible and mandatory for a business to pay pays on the day of the week, fortnight, or month that they do but cannot put the employees pays that is superannuation in their superannuation accounts at the same time. Accruals, and delays are just excuses to keep funds in a business until some time that has been mandated. When a business then fails to pay the employees wages (super is exactly that), they seem to get a free pass. Steal from an employer and it is a criminal act, steal from an employee is acceptable by the outcomes that occur and remember not ever paying their superannuation entitlement is stealing wages from the employee.

Another issue is that any SG shortfall a business has, is self reported and calculating is self managed. It is not the ATO who manage the reporting of any failures. Once a business has reported a shortfall the ATO may impose a Superannuation Guarantee Charge on the debt that is declared, they may also offer a discount or waive the charge. If a business fails to report a shortfall and ceases to exist then it may be very hard to recover any sums owed. Nothing in this is really about providing protection for the employees.

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The SG of 3% first introduced for many industries was in lieu in part of pay rises. Thus pay rises were less than would otherwise be the case due to initial SG contributions. Since then, increases have been considered separately to pay rises. Notwithstanding this, some employers may consider all employment benefits, including super, when determining package values. If a package has a ceiling and there is a super rise, this might impact on take home pay. Such has been argued with some recent SG percentage rises when total package values have not increased.

Many large organisations and governments use the ‘crap software’. I am sure they don’t think it is crap, but fits their operational needs. My last employer used SAP, and while it did what it did well, it was is inflexible to many simple changes. I was told one reason for inflexibility was to prevent changes which could cause no end of headaches for those who rely on it to work properly (viz. employees and employers).

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There are other possible reasons, aka management policies included. SAP is not a minnow.

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Another reason is SAP generates lots of revenue for SAP Consultants :wink:

It almost seems part of the business plan for the product because there are many variables that all interact, yet those who know how they do interact can ‘make it happen’. Unfortunately some of the consultants are ‘so-called’ because they are self proclaimed experts rather than ‘experts’ and make messes into bigger messes.

I trust we can leave whether it is trivial or not, as well as the 3 years to change from not depositing super at all or quarterly, to on each payroll?

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