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Crackdown on unpaid super: why employers could face jail time

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Employers who don't pay super could face up to 12 months' jail or court-ordered financial penalties.

This was one of the proposals in draft legislation released by the federal government in late January.

"It is not acceptable for people not to be paid their superannuation entitlements," Kelly O'Dwyer, the Minister for Revenue and Financial Services, said at the time.

Employees missed out on $2.85 billion in super payments in 2014-15, according to the Australian Tax Office, so this crackdown can't come soon enough.

jail for employers who don't pay super superannuation workers kelly o'dwyer

Other measures proposed in the draft legislation "to protect workers' superannuation entitlements and modernise the enforcement of the superannuation guarantee" include:

  • Single Touch Payroll, which will be mandatory for employers with 20 or more employees from July 1, 2018 will be extended to smaller employers from July 1, 2019. It means employers will report payments such as salaries and wages, pay as you go (PAYG) withholding and super information to the ATO directly from their payroll solution at the same time they pay their employees.
     
  • From July 1, 2018 super funds will have to tell the ATO as soon as they receive payments for employees from their employer.
     
  • Introduce a director identification number to help identify those directors who are robbing their employees of their superannuation.
     
  • Closing a loophole that could be used by unscrupulous employers to shortchange employees who use salary sacrifice arrangements. The loophole allows employers to calculate the amount they owe their workers based on the salary minus the voluntary sacrifices.

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Maria Bekiaris is editorial campaigns manager for Canstar and former deputy editor of Money. She holds a Bachelor's degree in business.
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