Labor cracks down on unpaid super
The federal government is clamping down on unpaid super, requiring employers to align the payment frequency of the Superannuation Guarantee (SG) with wages.
Federal budget documents revealed that the government will proceed with its earlier decision to align the payment of super and wages, enabling employees to track their entitlements.
"Aligning the payment of superannuation with wages and salaries will increase retirement incomes through greater compounding returns. This will simplify the tracking of superannuation payments for employees and support early intervention against underpayment," Budget documents said.
This change is forecast to improve retirement outcomes for around 8.9 million Australians, including for young and low-income workers who are most likely to have unpaid super. It will also increase tax revenue by $835 million.
Currently, Australian employees are vulnerable to exploitation if their employer fails to make the required superannuation contributions. These workers rely on ATO intervention to recover lost super.
However, the ATO is only able to recover a paltry 15% of owed superannuation.
The government announced that it will invest $27 million for the ATO to improve data-matching capabilities to identify instances of SG underpayment. The ATO will also receive $13.2 million for consultation and co-design with stakeholders on a new compliance system.
The government will also implement bolstered unpaid super recovery targets for the ATO. The tax office will be assessed on the payments made to employees as a proportion of superannuation raised, and the amount of super distributed within a year.
Meanwhile, Treasurer Jim Chalmers flagged "modest, but meaningful revenue measures" like tightening superannuation tax concessions for wealthy Australians.
The government is moving ahead with slashing the tax concessions available to individuals with a total superannuation balance over $3 million, from July 2025. Australians with super balances above $3 million will see their tax rates on earnings double to 30%, up from 15%.
The additional tax on earnings imposed by this measure will impact around 80,000 people in 2025-26, or approximately 0.5% of super accounts. But, the non-indexation of the $3 million superannuation cap could eventually impact around 500,000 people, according to ATO data.
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