The ATO has today released its estimate of the Superannuation Guarantee (SG) gap. The gap is the difference between the theoretical amount payable by employers to be fully compliant with their SG obligations and actual contributions received by funds.
The ATO estimates the net SG gap to be 5.2 per cent or $2.85 billion of the total estimated $54.78 billion in SG payments that employers were required to pay in 2014-15.
“While this analysis shows that 95 per cent of the estimated superannuation guarantee is paid to employees, the gap exists because some employers appear not to be meeting their super guarantee obligations either by not paying enough or not paying it at all. Superannuation has a vital role in providing for people’s retirement, and any non-payment is of concern,” Deputy Commissioner James O’Halloran said.
“The ATO has a range of strategies and activities in place to educate, support, monitor and enforce compliance by employers. We encourage people to report instances of non-payment to us and we respond to every one of the approximately 20,000 reports of possible non-payment of SG from employees or former employees we receive each year.”
This is the first time the ATO has released an estimate of the SG gap and the ATO worked closely with tax gap experts, other government departments, overseas tax administrations and industry stakeholders in developing and validating the gap estimate.
“As a result of this rigorous assurance process we are confident that we have an estimate that is reliable and credible,” Mr O’Halloran said.
“Estimating tax gaps forms part of the ATO’s broader accountability and transparency as a leading administrator, and is consistent with contemporary international best practice in tax administration.
“Undertaking an estimation of the Superannuation Gap will provide a useful insight into the operation of the superannuation guarantee system and allow the ATO to assess the effectiveness of our strategies to reduce the level of non-payment of superannuation guarantee.”
The ATO now meets on a quarterly basis with Australian Prudential Regulation Authority, Australian Securities and Investment Commission and the Fair Work Ombudsman to monitor the operation of the superannuation guarantee system.
“In addition to following up all reports of unpaid SG, we are increasing our proactive SG case work by one third this financial year. We have improved our analysis of data to detect patterns in non-payment, and are working more closely with other government agencies to exchange information,” Mr O’Halloran said.
“While business insolvency remains a reason that 50 per cent of unpaid SG is not able to be collected by the ATO we aim to find ways to increase the collection of outstanding superannuation guarantee debt. The payment of superannuation guarantee is an important obligation on employers and should be paid quarterly.”
Single Touch Payroll will further improve visibility on reporting and simplify tax and super interactions for employers, allowing the ATO to better identify non-compliance over time.
The ATO’s SG gap estimate can be accessed here: ato.gov.au/About-ATO/Research-and-statistics/In-detail/Tax-gap/