Industry fund Cbus has taken exception to the government's proposal to reduce the 'harshness' of the superannuation guarantee (SG) charge for employers.
The minister for small business, Bruce Billson, released draft legislation on Friday which indicated that penalties against employers who fail to pay their employees’ superannuation on time will be reduced as of 1 July 2016.
In response, Cbus chief executive David Atkin said: “The current superannuation guarantee charge is designed to impose a real incentive for employers to pay superannuation on time.”
“If anything its penalties for non-compliance should be strengthened to address the burgeoning non-compliance issue, not watered down.
“Rather than reducing penalties for non-compliance, we think the government should be looking to investigate aligning payment of the superannuation guarantee with wages and beefing up regulatory enforcement and education,” Mr Atkin added.
A statement issued by the Treasury said the SG charge will be "simplified by aligning the earnings base for calculating the SG charge (currently total salary and wages) with the earnings base for calculating SG contributions (ordinary time earnings)”.
Additional penalties will also be removed under the Superannuation (Administration) Act 1992 (SGAA) and aligned with the administrative penalties under the Tax Administration Act 1953, the statement said.
Mr Atkin noted that the problem of not paying super is increasing, referencing a finding by Tria Investment Partners, which estimated that there was a total of $2.5 billion in unpaid super contributions in 2012, a figure expected to have risen each year.
“This problem is getting bigger and is having an increasing impact on workers' superannuation balances and, therefore, on government revenues,” Mr Atkin said.
“Reducing penalties for employers who fail to obey the law is simply heading in the wrong direction.
“Superannuation is the deferred wages of employees. It’s not a cash flow component of a business. In fact, the majority of employers want to know that every other business is doing the right thing and paying super on time so that an equal playing field is maintained.”
A big four bank has been ordered to pay a $5 million dollar penalty by the Federal Court after it was found to have breached the ASIC Act an...
Treasurer Josh Frydenberg has flagged massive changes to foreign investment rules as Australia’s geopolitical climate becomes more complex...
ASIC has cancelled the AFSL of a retail OTC derivative issuer after its clients lost hundreds of thousands of dollars. ...