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The Association of Superannuation Funds of Australia (ASFA) has called on the Government to better fund the tax office to audit business for unpaid superannuation entitlements.
ASFA CEO Dr Martin Fahy said the Government should invest an additional AUD10m (USD7.6m) a year for the next four years in helping the Australian Taxation Office (ATO) tackle superannuation guarantee (SG) non-compliance.
"Non-payment of super is increasing in Australia with at least 690,000 or 6.5 percent of the workforce affected annually," Fahy said.
Generally, if an employer pays an employee AUD450 or more before tax in a calendar month, it must pay a minimum amount in superannuation. The SG is currently 9.5 percent of an employee's ordinary time earnings.
In January, the Government established a multi-agency working group to investigate SG non-compliance. It is tasked with identifying the main causes for non-compliance and with recommending ways to improve compliance and ensure that the law remains fit for purpose. A final report is due this month.
Fahy said: "Money that should be going into super and helping drive economic investment and long term improvements in individual retirement outcomes is being lost. People need that money to live better post-work and the entire Australian community benefits when the right thing is done for employees. Unpaid super means a drag on age pension expenditures by the government. That is a cost to everyone."
ASFA also recommended that superannuation be included in the definition of unpaid employment entitlements under the Fair Entitlements Guarantee (FEG). Under the FEG, the Government provides financial assistance to cover certain unpaid employment entitlements to eligible employees who lose their jobs due to the liquidation or bankruptcy of their employer.
ASFA estimates that it would cost up to AUD150m a year to include unpaid SG payments in the FEG. Up to 55,000 affected individuals would benefit from the initiative annually, it said.
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