Proposed new law

The Australian Government has signalled its intention to crack down on businesses who fail to comply with superannuation guarantee obligations by proposing legislation that would see directors, partners and other decision makers within an employer's business face financial penalties and imprisonment if they fail to comply with directions issued by the Commissioner of Taxation. The legislation also proposes to give the ATO additional powers to disclose an employer’s breaches or suspected breaches of superannuation legislation to affected employees and former employees during an investigation.

Criminal sanctions

The Draft Treasury Laws Amendment (Taxation and Superannuation Guarantee Integrity Measures) Bill 2018 (the Draft Bill), proposes to amend the Taxation Administration Act 1953 (Cth) to provide the Australian Taxation Office with the power to direct an employer who has failed to comply with the superannuation guarantee obligations to:

  1. Attend an approved education course at their own cost; and/or
  2. Pay an outstanding superannuation guarantee liability or estimate of the liability.

Failure to comply with either direction could result in penalties of up to $10,500 and/or imprisonment of up to 12 months.

The penalties are proposed to apply to individual employers, directors of companies, members of a management committee, partners in a partnership and any other person who makes or participates in making decisions that affect a substantial part of the business.

The Government has explained that the purpose in proposing to apply criminal sanctions to the offences is to provide additional incentives to employers to fully comply with their superannuation obligations and because unlike other debts owed to the Government, superannuation guarantee charges are distributed to the funds of employees who have not received their full superannuation entitlements from their employers.

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