• Superannuation

    Key indicators such as total employer contributions made on behalf of employees, levels of complaints by employees about unpaid superannuation, and the number of breaches by self-managed superannuation fund trustees reported by their independent auditors, all suggest that Australia's superannuation system is working as intended but some aspects require our continued attention.

    Our survey results show that only 68% of the community have confidence in our administration of superannuation. This is the first time we have specifically surveyed this aspect of our administration, and while the result is lower than for our tax administration, it is likely to be affected by people's broader perceptions about the policy parameters of the superannuation system (for example, the superannuation contribution caps).

    Superannuation guarantee

    In 2010-11 we received around 18,000 complaints from employees concerned about their superannuation. From the employee complaints finalised in 2010-11 we raised approximately $329.0 million of superannuation liabilities and penalties.

    In 2010-11 we targeted accounting services, computer system design and related services, and accommodation industries with educational messages and we will follow-up in 2011-12.

    This year we focused on employers in the high-risk industries that had been part of our education campaign the previous year. These industries included:

    • road freight transport
    • automotive body, paint and interior repairs
    • other automotive repairs
    • electrical services industries.

    Overall, our risk based compliance activities raised liabilities of a further $138.4 million in unpaid superannuation and penalties, comprising approximately $72.1 million from 2,803 voluntary statements and $66.3 million raised directly from assessments.

    In 2010-11 we collected $223.8 million of unpaid superannuation and penalties as a result of our compliance activities.

    Over the last five years we transferred a total of $1.3 billion in previously unpaid superannuation into member accounts.

    In 2010-11 the value of superannuation guarantee charge debt increased by 3.4% compared with 2009-10, reflecting the challenging economic environment. However superannuation guarantee charge debt collections in 2010-11 increased 31% compared with 2009-10.

    We were unable to recover $99.5 million of superannuation guarantee charge debt due to employers entering some form of insolvency administration. We also decided not to pursue recovery of $28.8 million because it was uneconomical to do so, for example, where there were no assets.

    Self-managed superannuation funds

    We continued to build stronger relationships with industry and co-regulators to strengthen the regulatory framework for self-managed superannuation funds. We assisted trustees to meet their regulatory and income tax obligations. However, we also undertook stronger enforcement strategies on identified areas of non-compliance.

    In 2010-11 85 funds were found to be non-compliant as a result of serious breaches by trustees, 330 individuals were disqualified from being trustees, 24 funds were wound up and 181 enforceable undertakings were made. The court also imposed penalties of $27,500 in two civil penalty prosecutions where the trustees had seriously breached the regulatory rules.

    In 2010-11 we worked with industry and other regulators to significantly restrict the use of self-managed superannuation funds to facilitate the illegal release of superannuation, and to pursue the promoters and participants. This involved:

    • stopping 373 funds from operating and a further 243 funds from registering because of their connection with schemes to facilitate the illegal release of superannuation
    • auditing 966 individuals and 33 promoters involved in illegal early release schemes raising over $14.4 million in liabilities
    • introducing a self-managed superannuation fund member-verification system - the system enables large superannuation funds to confirm the membership of these funds
    • together with the Australian Prudential Regulation Authority, issuing a rollover guide for these funds to use when actioning rollover requests for self-managed superannuation funds.

    Recognising the importance of their role in our administration of self-managed superannuation funds, we also provided additional support for approved auditors and undertook a number of audits of their compliance.

    Contribution caps

    This year we made a priority of identifying individuals appearing to have exceeded the contributions caps. We issued 50,954 assessments and raised $243.6 million in liabilities.

    TABLE 4.22: Excess contributions tax assessment issued, 2010-11

    Contribution caps

    No.

    $m

    Concessional

    47,085

    72.1

    Non-concessional

    3,118

    157.0

    Concessional and non-concessional

    751

    14.5

    TOTAL

    50,954

    243.6

    NOTE
    There may be minor variances due to data allocated on an attribution basis.

    During the year the government announced changes to the contributions caps arrangements from 1 July 2011. Under the proposed changes individuals breaching the concessional contributions cap by $10,000 or less will be able to request the excess contributions be withdrawn from their superannuation fund and refunded to them. Those excess concessional contributions will be taxed at the individual's marginal tax rate. The proposed changes will only apply for first-time breaches of the concessional cap and apply for contributions made in the 2011-12 financial year onwards.

    Lost and unclaimed superannuation money

    The total number of lost accounts reported by superannuation funds decreased by 800,000 this year to 5 million, with a reported value of $20.2 billion (up $1.4 billion from 30 June 2010). This is made up of 3.5 million lost-uncontactable accounts with a value of $12.1 billion and 1.5 million lost-inactive accounts worth $8.1 billion.

    To help reunite members with their superannuation we provided some funds with the current addresses of a significant number of members. We also phoned 177,303 members relating to 307,557 accounts and issued 474,750 letters to encourage members to search for their lost and unclaimed superannuation money.

    We also introduced a pre-filled electronic portability form, making it easier for members to transfer lost superannuation money to their funds. Members may search for lost superannuation using our online search tool, SuperSeeker. The tool received 2.1 million hits in 2010-11.

    At 30 June 2011 we held $730 million of unclaimed superannuation money relating to 2.3 million accounts. This was an increase of $337 million over the $393 million held at 30 June 2010. This increase was principally due to legislative changes, including the small and insoluble lost member account measure implemented in 2010-11 which saw 1.7 million accounts worth $184 million being paid to us as unclaimed superannuation money. Approximately $404 million of our 30 June 2011 holdings related to temporary residents. During the year an amount of $36.3 million was paid out as a result of claims made for unclaimed money with $14.7 million in tax withheld as a result of these claims.

    Legislation implemented in November 2010 also allowed the Commissioner to accept unclaimed superannuation money from the states and territories. Victoria and the Australian Capital Territory transferred their unclaimed superannuation money holdings to us during 2010-11.

    Co-contributions

    To raise awareness of changes for 2010-11, we provided a range of communication products regarding new labels on income tax returns and options for reviewing entitlements for previous years.

    Timely payment of the correct co-contributions to eligible individuals is affected by late, incomplete or inaccurate member contribution statements or annual returns of self-managed superannuation funds. In 2010-11 we audited 12 large funds regulated by the Australian Prudential Regulation Authority to ensure that eligible individuals received their correct co-contribution entitlements.

    Superannuation holding accounts special account

    The superannuation holding accounts special account was closed to employer superannuation deposits on 30 June 2006. However, the special account still contains individual accounts where holders have not yet transferred their money to superannuation funds or retirement savings accounts. They also hold superannuation guarantee charge and co-contribution amounts where we cannot find a superannuation account for the relevant individual.

    In 2010-11 the overall balance in the superannuation holding account special account was $71.7 million, a 14% reduction from the $83.6 million at the end of 2009-10. During the year payments and transfers were $16 million and deposits were $4.1 million.

    Bilateral social security agreements

    Bilateral social security agreements addressing double superannuation coverage commenced with the Republic of Poland on 1 October 2010 and the former Yugoslav Republic of Macedonia on 1 April 2011. In addition administrative arrangements to support an agreement with the Czech Republic were signed on 28 March 2011 and an agreement with the Slovak Republic was signed on 22 September 2010. These two agreements should come into force in 2011-12.

    We issued 1,091 new and amended certificates of coverage in 2010-11 for employees seconded to work overseas. A certificate exempts the employer from providing superannuation (or equivalent) in the country the employee is seconded to, as long as the employer continues to pay superannuation guarantee for the employee in Australia. Other countries have reported they issued 3,203 certificates in 2010-11 to employees coming to work in Australia, and a further 315 certificates have been reported to us that were issued in 2009-10.

      Last modified: 31 Oct 2011QC 28036