Christine Dacey, Assistant Commissioner, Superannuation provided the meeting with a brief overview of superannuation guarantee compliance in general and more specifically in the building and construction industry. She also provided a short report on a recent joint pilot project between the ATO, Industry Funds Forum and Cbus superannuation fund.
General compliance
Australian Prudential Regulation Authority (APRA) data indicates that employer contributions have been increasing each year (2009-10 was $72.0b, up $0.9b from 2008-09) and continue to exceed 9 percent of total salary or wages.
There are relatively low numbers of employee complaints about employers not paying the correct superannuation guarantee contributions, or not offering choice of superannuation fund (less than 0.2percent of the overall employee population) and in about a third of complaints the employer has met their superannuation obligations, or the employee was not entitled to superannuation guarantee support.
In order to ensure that employers meet their superannuation guarantee and choice of fund obligations, the ATO conducts a wide variety of activities aimed at optimising compliance. These are broadly categorised into activities that:
- provide education and advice
- make compliance easier, cheaper and more personalised
- investigate complaints from employees
- are risk-management based interventions
In 2010-11 the ATO reviewed the compliance of more than 18,000 employers.
The ATO kept employees updated about the progress of their complaints about employers not meeting their superannuation guarantee obligations by issuing nearly 56,000 letters
While the ATO continue to meet our commitment to follow up on all employee complaints, proactive work accounted for approximately 25 percent of compliance work in 2010-11.
Superannuation compliance in the building and construction industry
Analysis of ATO employer data indicates that the building and construction industry is the largest of any industry group, representing approximately 15 percent of the employer population.
Given the number of superannuation guarantee complaints received for the building and construction industry is in proportion to the population, there is little evidence at a macro-level to suggest the industry is a higher risk compared to other industries.
Overall, intelligence from the employer obligations audits undertaken by the ATO indicates the building and construction industry has an adequate level of understanding of their superannuation obligations, but has very few employers with good superannuation knowledge when compared to other industries. This could indicate a risk of non-compliance with the more complex areas of superannuation, such as superannuation guarantee for contractors.
To promote greater compliance within the industry and help employers determine whether new or existing employees are a contractor or an employee, the ATO website features the Building and construction industry - employee/contractor decision tool
Joint ATO, Industry Funds Forum and Cbus superannuation fund pilot
Earlier this year in an effort to gain a better common understanding the ATO and the Industry Funds Forum (IFF) established a pilot project examining superannuation non-compliance.
The pilot was conducted between the ATO, Industry Funds Forum and an IFF nominated superannuation fund (Cbus) representatives. The Industry Funds Forum requested that the pilot review data from the building and construction industry as they believed there was a high level on non-compliance in this sector.
In summary the pilot found:
- The parameters already used by the ATO to detect non compliance are consistent with those found to be indicators of non compliance in the Cbus data.
- There was no significant difference in the Cbus data between employers in the building and construction industry and those in other industries.
- There is currently an extensive suite of ATO activities to deter, detect and deal with employers not complying with their superannuation guarantee obligations.
Meeting discussion:
- The Construction, Forestry, Mining, Energy Union raised several issues and will discuss these with the ATO out of session.
- A concern was raised that some employees with lower levels of literacy and numeracy skills May be unaware that their employer is not fulfilling the obligation to pay superannuation contributions.
It was noted that in the 2010 federal election and the 2011-12 Federal Budget, the government proposed that employees receive information on their payslips about the amount of superannuation actually paid into their superannuation fund account and also receive a quarterly notification from their superannuation fund if regular superannuation payments cease.
An intention of this announcement is to engage employees to take more interest in their superannuation payments with the view to early intervention if a problem should arise.
- A comment was made about employers that are reluctant to sign trust deeds with a superannuation fund nominated by an employee and the potential for the contributions of the employee to become 'lost in the system'.
It was confirmed that there is no obligation for an employer to sign a trust deed with a particular superannuation fund.
Sections within Agenda items
Last Modified: Tuesday, 17 July 2012