Australian workers press for tougher ATO action on unpaid superannuation

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ATO action on unpaid superannuation

Highlights

Australian Taxation Office faces criticism for slow recovery of unpaid superannuation, with workers reporting no returns up to 18 months after ATO rulings in their favor.
Payday super rules effective July 1, 2024, require employers to pay super simultaneously with wages, enabling real-time monitoring but raising calls for more active enforcement.
Australian National Audit Office reports only about 15 per cent of unpaid superannuation is recovered on average, prompting recommendations for expanded government guarantees and recovery powers.

Recovery gaps sharpen scrutiny of enforcement

As reported by ABC News, workers and superannuation industry representatives are urging the Australian Taxation Office to take a more proactive approach to recovering unpaid retirement contributions from employers. The criticism comes despite the regulator saying it dedicates significant resources to employer education, audits and debt recovery after liabilities are raised.

Two Brisbane oral health therapists, Pauline Devin and Angela Noack, say they are still waiting for about $5,000 and $3,000 respectively in unpaid super from a dental clinic where they worked two years ago. They filed separate complaints with the ATO early last year, and the regulator found in their favour in April, but 18 months later neither says any money has been returned to their super fund.

The ATO declines an interview request in the report but says in a statement that privacy and tax secrecy laws limit what it can disclose to employees during recovery efforts. It also says workers are advised when unpaid super is collected on their behalf.

Industry Fund Services, which recovers unpaid super for three funds, says it follows employers with digital messages, calls and escalation steps including final demand notices and potential legal action. Executive manager of super recoveries Natalie Lister says that model helps engage employers early, with only a minority of cases requiring stronger action.

New payday rules raise expectations for faster action

Industry advocates say the ATO now has better tools to identify unpaid super after the introduction of payday super on July 1 this year, which requires employers to pay super at the same time as wages. Super Members Council chief executive Misha Schubert describes the reform as a major shift because it gives both workers and the regulator real-time visibility over contributions.

Even so, Schubert says those new powers need to be matched by more active compliance and clearer communication with affected employees. She says workers should not have to act as their own debt collectors and calls for regular updates, clearer points of contact and tougher penalties for employers that fail to pay.

The ATO says it uses multiple data sources, including single touch payroll, super fund reporting and employee and third-party referrals, to proactively identify non-compliance. It also points to internal figures showing 92 per cent of super contributions by dollar value are paid voluntarily, although critics argue that metric understates the effect on lower-paid workers who are more likely to be short-changed.

A 2022 Australian National Audit Office report backs the estimate that only about 15 per cent of unpaid superannuation is recovered on average. Where employers become insolvent, Schubert says the federal government should expand the Fair Entitlements Guarantee to include unpaid super, while the government notes that since July 2024 it has strengthened the scheme’s recovery program so liquidators funded by the state can pursue eligible unpaid super guarantee charge amounts.

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