The current reporting system has superannuation funds reporting member contributions to the ATO on an annual basis, leaving the tax office with no visibility of payment information for up to 15 months after the start of the financial year, according to IPA chief executive officer Andrew Conway.
“There is a lack of transparency around the date that superannuation guarantee is actually paid. Employers have 28 days after the end of the quarter to remit superannuation guarantee contributions for employees,” Mr Conway said.
“This extended gap makes it difficult for the ATO to identify non-compliant employers in a timely manner.”
The Single Touch Payroll (STP), which will become mandatory from 1 July 2018, will help increase transparency and visibility, Mr Conway said.
“However, STP will not be compulsory for businesses with less than 20 employees. The majority of non-compliant employers are small business operators so even with STP, timely corrective action will continue to be initiated from employee complaints, forcing the ATO to play catch-up.
“The onerous penalty regime has done little to curb behaviour of non-compliant employers so the ATO needs timely reporting of superannuation guarantee entitlements and payments to be proactively managing the situation.”