Workers who lodge an unpaid superannuation related complaint with the Australian Tax Office (ATO) have to wait eight months on average for their case to be closed, and it’s a lag that the Government needs to address, politicians and super experts have warned.
Over the duration of the 2021-21 financial year, the average time between an employee making a complaint about unpaid super and the closure of an ATO employer review was eight months, data released to South Australian Senator Rex Patrick revealed.
Close to 50 percent of the unpaid superannuation liabilities raised are then paid within three months, with the ATO saying it is investing in resources and process improvements to cut the wait in 2021-22.
“It is never acceptable for people to be short changed on retirement income, but especially so in an environment of stagnant wage growth. Businesses must do the right thing by their workers,” says South Australian Senator Rex Patrick
Data released by the ATO has also shown that it completed 16,400 reviews of employers based on employee complaints. Of those, 11,500 employers were found to have owed around $790 million in unpaid superannuation.
The magnitude of the problem highlights the need for reform, Patrick said.
“Whilst the Tax Office appears to be doing a good job, prevention is better than cure. Super contributions should be merged with pay days. This would make it administratively simpler for business and would ensure small payment issues are solved before they grow into large payment issues,” says South Australian Senator Rex Patrick.
All up, Australian workers are owed $5 billion with the average dudded worker losing $1,700 in super over the 2018-19 financial year.
This means that by the time they reach retirement, those who were unpaid super could be as much as $60,000 worse off.
ISA CEO Bernie Dean agreed with Senator Patrick argument that mandating superannuation payments coincide with payday is the easiest way to solve the problem.
“During the pandemic, too many people got the shock of their lives that they couldn’t trust their payslip. Their payslip said they would get the super, but when they went to the super account, it wasn’t there,” says ISA CEO Bernie Dean
“The ATO is falling well short of reasonable community expectations in helping people to get their legal entitlements. But we’ve got to be honest the ATO will always be behind the 8-ball on this, as long as employers do not need to pay super with wages,” continued Bernie Dean.
As it currently stands, superannuation doesn’t need to be paid more frequently than every quarter, and it means it can be difficult for employees to track whether it is actually going in.
And until the problem is resolved, Bernie Dean believes the ATO will continue to take action that is “too little, too late”.
The Federal Government has in recent years said it would crack down on unpaid superannuation, however Dean said the latest ATO figures “make a mockery” of that claim.
“The ATO has shown that it’s still pretty well all up to the worker to chase money that they’ve earned and that they are owed. Eight months is far too long to wait for a legal entitlement to be delivered to you,” says ISA CEO Bernie Dean.
The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 1300 1 VAULT (1300 182 858)
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