Explanatory Memorandum(Circulated by authority of the Minister for Revenue and Financial Services, Minister for Women and Minister Assisting the Prime Minister for the Public Service, the Hon Kelly O'Dwyer MP)
Chapter 2 Disclosure of information about non-compliance
Outline of chapter
2.1 Schedule 2 to the Bill amends the TAA to provide the Commissioner with the ability to disclose information that relates to a failure or a suspected failure by an individual's employer or former employer to comply with their obligations under the SGAA or related obligations under the TAA.
2.2 All legislative references in this Chapter are to the TAA unless otherwise stated.
Context of amendments
2.3 The Superannuation Guarantee Cross-Agency Working Group was established in December 2016 to report on the operation, administration and extent of non-compliance in the superannuation guarantee system in Australia.
2.4 In March 2017, the Superannuation Guarantee Cross-Agency Working Group released its final report, which contained its final recommendations on options to improve superannuation guarantee compliance.
2.5 This amendment is one of several measures announced as part of the Government's package of reforms to strengthen compliance with superannuation guarantee obligations by employers. The amendment is based on recommendation 3 contained in the Superannuation Guarantee Cross-Agency Working Group's report.
2.6 Division 355 in Schedule 1 contains the taxpayer confidentiality rules. Subject to certain exceptions, it is an offence for taxation officers to disclose or make a record of 'protected information' in respect of an entity if the information is acquired in their capacity as a taxation officer.
2.7 Protected information is information that is disclosed or obtained under or for the purposes of a taxation law. The information must relate to the affairs of the entity (although not limited to their taxation affairs) and it must identify, or be reasonably capable of being used to identify the entity.
2.8 The prohibition on disclosure does not apply where an exception to the offence applies. These exceptions include disclosures for other Government purposes.
2.9 One of the exceptions for other Government purposes is contained in item 7 to table 2 in section 355-65(3) in Schedule 1 which provides a specific exception allowing a taxation officer to make a record or advise employees and former employees who have made a complaint about a failure by their employer or former employer to comply with their superannuation guarantee obligations. Under this exception, a taxation officer is permitted to make a record or disclose information relating to the Commissioner's response to the complaint with respect to the employee who made the complaint.
2.10 The exception does not cover information relating to the general financial affairs of the employer.
2.11 Where an employee has not made a complaint about their employer or former employer's failure to comply with their superannuation obligations, a taxation officer cannot disclose information about that failure to the employee as it is protected information. This is because the exception in item 7 of table 2 in section 355-65(3) of Schedule 1 does not apply to this situation. This can occur in circumstances where the Commissioner initiates an investigation or where another employee has complained about the individual's employer.
2.12 Once a liability for superannuation guarantee charge is established through the lodgment of a superannuation guarantee statement or the making of a default assessment, the taxation officer can tell an employee when payments for superannuation guarantee charge are distributed to the employee's superannuation fund.
Summary of new law
2.13 A taxation officer is permitted to disclose protected information that relates to a failure or a suspected failure by an individual's employer or former employer to comply with their obligations under the SGAA or the TAA as it relates to the SGAA in relation to the employee.
Comparison of key features of new law and current law
|New law||Current law|
|A taxation officer is permitted to make a record or disclose protected information to an individual who is or was an employee where the record or disclosure is information that relates to a failure or a suspected failure by the individual's employer or former employer to comply with the employer's obligations under the SGAA or the TAA as it relates to the SGAA in relation to the employee.
The information or disclosure cannot relate to the general financial affairs of the employer.
Detailed explanation of new law
2.14 These amendments expand a taxation officer's ability to disclose information in relation to an employee by providing an exception to allow the making of a record or disclosure of protected information to current and former employees which relate to the following:
- A failure by the individual's employer or former employer to comply with the employer's obligations under the SGAA or the TAA;
- Where the Commissioner reasonably suspects there has been a failure to comply with the employer or former employer's obligations under the SGAA or the TAA; or
- Any actions taken by the Commissioner in relation to such a failure or suspected failure.
[Schedule 2, item 2, item 7A to the table in subsection 355-65(3) in Schedule 1]
2.15 These amendments supplement the existing law which allow the Commissioner to disclose protected information relating to the Commissioner's response to a complaint by an employee about their employer's failure to comply with the employer's obligations under the SGAA or the TAA in relation to the employee.
2.16 These amendments are designed to allow a taxation officer to disclose information where the Commissioner has evidence that there has been a failure or reasonably suspects there has been a failure to comply with the employer's obligations under the SGAA or the TAA so far as it relates to an individual employee of the employer.
2.17 This will generally be where an employer has failed or is suspected of failing to pay the superannuation guarantee charge and lodging the superannuation guarantee statement by the due date. These obligations are triggered where an employer has a superannuation guarantee shortfall (which is made up of the total of all of the individual superannuation guarantee shortfalls for the employer) and the employer has not reduced the shortfall to nil by paying employee superannuation guarantee contributions before the relevant due date. An employer also has a range of other obligations under the SGAA relating to reporting and providing information to the Commissioner and paying estimates of superannuation guarantee charges.
2.18 Under the amendments, the Commissioner can inform a current or former employee about information where the Commissioner is aware of a failure or reasonably suspects there has been a failure by their employer to comply with their superannuation obligations. The Commissioner should have evidence to support its conclusion that there is a reasonable suspicion of a failure in order to trigger the disclosure. This allows the Commissioner to initiate its own disclosures based on the compliance activities being undertaken by the Commissioner and increased reporting from employers and superannuation providers.
2.19 The exception also permits the Commissioner to disclose information relating to an individual that relates to the Commissioner's response to a failure or suspected failure of an employer to comply with their superannuation obligations.
2.20 The Commissioner is able to disclose information even if at a later time, it is found that there was no such failure. This is because the information would still relate to the Commissioner's actions in response to a suspected failure to comply.
2.21 The information that can be disclosed under the amendments can include the compliance activities and debt recovery action that the Commissioner is undertaking in relation to the employer's failure and the Commissioner's actions to recover unpaid superannuation guarantee charge from the employer. For example, if the Commissioner has issued an estimate or a director penalty notice to recover the unpaid superannuation guarantee liabilities, this can be disclosed under the amendments.
2.22 While these compliance activities may relate to information that affects multiple employees of the employer, provided the information has a connection to an individual employee affected by a failure or a suspected failure, the Commissioner is able to disclose this information under the amendments.
2.23 The amendments do not permit information that relates to the general financial affairs of the employer to be disclosed. This would cover actions that the Commissioner is taking in respect of the employer that has no connection with the employee. For example, if the Commissioner was separately pursuing the employer for an unpaid income tax debt, then this information would not be an allowable disclosure. On the other hand, if the Commissioner was taking recovery action against the employer for an amount comprising both amounts relating to unpaid superannuation guarantee charge and other tax debts, information about the actions being taken would be an allowable disclosure, but details of the other unrelated debts would not be an allowable disclosure.
Example 2.1 - disclosure to other employees who have not lodged complaints RCorp has three employees, Nathan, Jill and Amy. The Commissioner receives a complaint from Amy who believes RCorp has not been paying her superannuation guarantee correctly. Haydon, a taxation officer, commences an investigation of RCorp's superannuation guarantee compliance. Haydon's investigations reveal that Nathan and Jill may also have been underpaid superannuation guarantee for the same quarter.Under the existing law, Haydon could only discuss his investigation with Amy and would not have been able to disclose the suspected failure to Nathan or Jill. Under the amendments, Haydon can now inform Nathan and Jill about the suspected underpayments of superannuation guarantee.Haydon completes his investigation and establishes a superannuation guarantee charge liability for RCorp. Haydon is able to keep Amy, Nathan and Jill informed of the actions being taken to recover the superannuation guarantee charge amounts that relate to each of them.As an extension to this scenario, if during investigation, Haydon identifies that in addition to the unpaid superannuation guarantee charge amounts, RCorp has also failed to pay its income tax debt for two years. Haydon issues a garnishee notice to RCorp's bank for the total amount of unpaid superannuation guarantee charge and income tax. Haydon can inform Amy, Nathan and Jill that the garnishee notice has been issued. However, Haydon cannot disclose any specific details about the income tax debts as they are unrelated to the suspected underpayments of superannuation guarantee charge.
Example 2.2 - disclosure based on Commissioner's own investigations Jo, a taxation officer, has been reviewing data received from a number of superannuation funds. She notices a mismatch in the employer contributions for a number of GCorp's employees compared to other data received in relation to GCorp's payroll. Jo suspects that GCorp may have stopped paying superannuation guarantee for its employees but not lodged superannuation guarantee charge statements.Jo notifies the employees of GCorp that the Commissioner suspects there is unpaid superannuation guarantee charge relating to them. Jo issues a default assessment to GCorp in respect of the unpaid liability of superannuation guarantee charge and then issues a director penalty notice to the directors for the unpaid liability.Under the amendments, Jo is able to contact GCorp's employees about GCorp's possible failure to comply with its obligations under the SGAA but only to the extent the disclosure relates to the particular employee's entitlements. Jo is also able to disclose that the Commissioner has issued to GCorp a default assessment and director penalty notice in respect of the unpaid superannuation liability to recover that particular employee's entitlements.
2.24 An amendment to ensure that a disclosure that is made under item 7 to the table in subsection 355-65(3) in Schedule 1 also includes a failure to comply with an obligation under the TAA as it relates to the SGAA. This is to capture all of the information that the Commissioner can disclose in their response to a complaint by an employee where there has been a failure of an obligation under the TAA. [Schedule 2, item 1]
2.25 An amendment to clarify that a taxation officer is able to provide disclosures to an employee if there is a dispute to whether they are an employee. [Schedule 2, item 3, subsection 355-69(9) in Schedule 1]
Application and transitional provisions
2.26 The amendments in relation to the disclosure of protected information relating to a failure or a suspected failure of an employer to comply with obligations under the SGAA or under the TAA apply to records and disclosures made on or after 1 July 2018 (regardless of whether the failure or suspected failure to comply with the obligation occurred before, on or after 1 July 2018). [Schedule 2, item 4]
2.27 The disclosures can apply to a failure or a suspected failure to comply with an employer's superannuation obligation that has or is suspected to have occurred before 1 July 2018 because the event would have already occurred. The amendments allow the Commissioner to disclose historical information relating to the potential effected employee which can impact on their superannuation entitlements.
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).