SMSF: Timeframe to become compliant shortened to aid acceptance of employer super guarantee

BALLARAT, Australia - March 20, 2019 - PRLog -- The ATO has reduced the timeframe it takes for SMSFs to become compliant and announced several changes with the process of issuing the compliance notice.

According to the ATO, starting March 2019, the timeline for new SMSFs to be compliant on the super fund lookup will become shorter. Several days after registration, the fund will appear on the super fund lookup as "registered – status not determined." After a few more days, the notice of compliance will issue and change the status to "complying."

The change in status previously occurred when the fund lodged its first SMSF annual return. This measure eliminates confusion about the fund's status or its ability to accept employer super guarantee contributions or rollovers from another fund.

Industry Super Australia conducted a report with region-by-region estimates of unpaid superannuation entitlements and found that an increasing number of Australian workers who are eligible for the compulsory 9.5% Super Guarantee are not getting it. The gap in superannuation entitlements over the past year has risen to $5.9 billion.

The estimates are very accurate as these are based on actual tax receipts, random and anonymous personal tax and super records returned to the ATO. NSW was estimated to have the second highest proportion of underpaid workers next to the Northern Territory. However, underpayment of superannuation is a systemic problem from state to state.

Workers who are under 35 years old, employed in blue collar jobs or who are part-time or casual and earn under $30,000 are the most likely to be underpaid on compulsory super payments. The report calls for changes to the superannuation legislation that would force employers to pay super at the same time as the salary.

Employers currently don't have to pay super until the end of a financial quarter which would be the contributing factor of superannuation losses. Employers tend to forget to or simply don't pay it or they try to earn interest for themselves for an extended period because the money has been sitting in their super fund. The report calls on the ATO to be proactive in its investigations of breaches and penalise offending employers.

The ATO has taken breaches of the Super Guarantee very seriously and in the 2017-2018 financial year had undertaken 31,954 compliance cases with financial year. Financial penalties being handed down to employers on top of enforced super payments in a third of the cases and 332 of them had penalties representing more money than the amount of super left by the employer.

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