Super

Think you can get away with not paying your employees’ super? Think again!

BAS Agent's Blog, Payroll & Superannuation, Single Touch Payroll / By / / , , , , , / 3 minutes of reading

Employers intentionally not paying their employees’ super has always been a bugbear of mine. If you follow my Twitter (X) account, you may have seen the hashtag I use: “#notyourmoney“. I use this hashtag because I believe that employee superannuation is not your money and never will be and I want to enforce this concept. These irresponsible employers anger me. It is completely wrong to hire people and then fail to fulfill the contract you agreed upon, which includes paying their super. In my opinion, not paying super is equivalent to stealing.

In the past, employers were able to get away with this unacceptable behavior because the Australian Taxation Office (ATO) only found out about it when employees reported them. At that point, the ATO would investigate, audit, and penalise these employers. This reactive approach has resulted in an estimated $2.5 billion shortfall in unpaid super. This is a truly disgraceful situation.

But things are about to change…

In the 2023-24 Federal Budget, it was announced that the ATO will receive $40.2 million for super compliance measures. This funding includes $27 million for data matching capabilities to identify and take action on cases of Superannuation Guarantee (SG) underpayment, as well as $13.2 million for consultation and co-design.

So what does this mean? Who/what will the ATO be data matching with?

Firstly, it is now widely known that the ATO receives payroll data from employers through Single Touch Payroll events (STP). This data includes the superannuation amounts owed to employees’ super funds. The ATO also receives information about employees’ super from the Australian Prudential Regulation Authority (APRA) through the Member Account Transaction Service (MATS). MATS is a reporting service used for more frequent and detailed reporting of member super contributions and transactions. The ATO utilises the information from both sources to identify potential non-compliant behaviour by employers.

With increased funding from the budget, the ATO will intensify data-matching activities between STP and MATS. This shift from a reactive to a proactive approach means that the ATO will be able to initiate audits themselves instead of relying on employees to report non-compliance after the fact.

It is important to note that this data-matching activity is not new. It has been ongoing since 2019, with the ATO reporting a 24% increase in investigations of super non-compliance. What is new is the improved data matching capabilities enabled by better technology and more comprehensive STP data.

The ATO is now more focused than ever on addressing super non-compliance. They have the necessary tools and resources to conduct investigations and audits on a large scale.

This makes me feel more positive about this problem. I sincerely hope the ATO succeeds in its efforts. I have a strong aversion to employers who think they can evade paying super. It is essentially stealing, a white-collar crime. Thanks to the ATO’s real-time monitoring, the likelihood of getting away with non-payment of super is rapidly decreasing. And that is a very good thing!

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$450 Super Guarantee Threshold Scrapped!

BAS Agent's Blog, Payroll & Superannuation / By / / , , / 2 minutes of reading

As part of the Government’s Treasury Laws Amendment Bill 2021 which passed on 12th February 2022, it has been decided that the $450 superannuation guarantee threshold will be removed. This will begin on July 1, 2022. 

The scrapping of the threshold will make about 300,000 more workers eligible for super contributions, including many low-income employees in part-time and casual positions. This will ensure all workers can build their retirement savings, not just those in higher-paid, full-time positions.

Currently, employees must gross a minimum of $450 per month with one employer in order to be paid super on top of those wages (note, this can be $350 per month for those working in the hospitality industry e.g. award MA000009 Hospitality Industry). Those who work casually or part-time may find that they never quite reach that threshold even if they hold several jobs at once. For example, an employee who has 3 casual jobs, earning $300 per job per month, will not receive super on any of those wages due to the $450 threshold. This hardly seems fair and is the main driver for the removal of the threshold.

So, from July 1, 2022, if you employ staff, you will need to pay super contributions on all their earnings, no matter how little each month. For example, if your employee grosses $100 for the month, then super of $10 (currently paid at 10%) will accrue and be paid to the employee’s super fund.

While the move to remove the super threshold is pleasing in my opinion, it is worth noting that employers’ payroll budgets will increase as a result. The cost to employ staff is currently very high and this change will only serve to make it higher! Add in the next super guarantee increase to 10.5%, also from 1 July 2022, and I think we shall see some employers squirming!

While your payroll software will more than likely be upgraded to take up the removal of the super threshold, it is worth noting the start date to ensure you can check your payroll setup is correct when the time comes.

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Stapled Super Funds

Payroll & Superannuation / By / / , , , / 3 minutes of reading

In an attempt to protect and improve workers’ retirement savings, the Government announced super reforms “Your Future, Your Super”. This was passed into law on the 24th of June 2021.

As part of these new laws, how you, as an employer, deal with new employees’ super funds and subsequent payment into those funds, has changed.

From 1st November 2021, when a new employee starts working for you, you must pay their super into their “Stapled Super Fund” if he/she does not provide you with a choice of fund.

What is a Stapled Super Fund (SSF)?

An SSF is an existing super account that is linked or “stapled” to an employee so that it follows him/her around when he/she changes jobs.

Why do we need Stapled Super Funds?

In the past, it was common for employees to end up with multiple super accounts, especially when employers paid super into their default super funds. Having multiple accounts means that employees are unwittingly paying fees from each account which can add up to a lot of lost retirement savings. From the ATO, “the change aims to reduce account fees by stopping new super accounts being opened each time an employee starts a new job”.

How do you know when you need to use a SSF and how do you do it?

Currently, when a new employee starts working for you, you must provide him/her with a Super Standard Choice Form to complete. The form will provide you with the employee’s super details. If the employee fails to provide these details to you, you must then find out what his/her SSF is and pay super into that fund.

A request for an SSF for your employee is done via Online services for Business (or your Tax/BAS Agent can do it for you). If you cannot access Online Services, you can ring the ATO on 13 10 20 to make the request. When you log into your online account, go to the Business tab, then Employee Super Accounts, then click on “request”. Follow the prompts and you will be provided with the SSF within minutes.

Please note, that you will not be able to make an SSF request until the ATO has confirmed that you are the employee’s employer. This is done via either them receiving the Tax File Number Declaration details or by an STP lodgement event.

How is a SSF determined by the ATO?

The ATO will find the fund that has had the most recent contribution paid into it. This will become the employee’s SSF.

What if a SSF is not provided by the ATO?

If this happens and your employee has still not provided his/her super details, you may make payments into your default super fund.

What happens if the SSF rejects the payment?

If this happens, the ATO recommends that you make another request. If the same SSF is provided, then you must call the ATO on 13 10 20 for assistance.

Is there a transition period?

Yes! The ATO is providing a transition period. This will be between 01/11/2021 and 31/10/2022. After this period has ended, the ATO may apply penalties should you fail to comply with the Stapled Super Fund rules.

Summary – see our infographic below (free to download)

  1. Stapled Super Funds begin on 1st November, 2021.
  2. Only request SSF for employees who do not provide their super details to you.
  3. SSF requests are done via Online Services for Business or your Tax/BAS Agent can make the requests on your behalf.
  4. If an SSF does not exist, you may make super payments for the employee into your default super fund.
Stapled-Super-FundsDownload

Need more help? Here are 2 reference guides from the ATO

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Superannuation Services Extended

BAS Agent's Blog, For BAS Agents, Payroll & Superannuation / By / / , , , , / 2 minutes of reading

A new legislative instrument has been released which has extended the services BAS Agents can provide to clients in relation to the super guarantee charge (SGC). BAS Agents have been able to assist clients with superannuation tasks for approximately 2 years now, but this instrument allows them to do more and be of greater benefit to clients.

BAS Agents can currently offer superannuation services to clients like processing, advising upon and lodging monthly/quarterly superannuation guarantee data. The Tax Agent Services (Specified BAS Services Services No. 2) Instrument 2020, as it is known, will allow BAS Agents to expand upon these services to include the following tasks in relation to SGC:

  • Act as an authorised contact on behalf of clients with the ATO in relation to SGC accounts, payment arrangements, penalty remissions, super audit and/or review activity;
  • Advising clients when the superannuation guarantee (SGC) charge applies and why;
  • Advising clients about offsetting late payments of superannuation contributions against the SGC;
  • Completing the late payment offset election section of the SGC statement;
  • Acting on behalf of clients in relation to lodging the SGC statement.

The instrument will also allow BAS Agents to view and access superannuation guarantee and SGC accounts in online services.

If you are a BAS Agent and would like to read the detail of the new instrument, here is the link to the Explanatory Statement.

The new legislation means that we can now assist clients with superannuation services on a much higher level and therefore provide more value than before. We have added these new services to our services page where you can also view other services we provide.

If you would like to find out more about the superannuation guarantee charge, go to this ATO webpage.

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Quick-start guide for new employers

BAS Agent's Blog, Payroll & Superannuation / By / / , , , , , , , / 4 minutes of reading

So you’re going to start employing staff. That’s great, this usually means your small business is booming, so well done to you! Before you don your employer’s hat however, you need to make sure that you have all of your ducks in a row. There are quite a few things you need to do so to that end, we have created a quick-start guide for new employers. Our guide will tell you what you need to know, supply crucial documents and provide links to important information. Pop this blog link in your favourites for quick access as you will find it useful each time you on-board a new staff member.

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