We have previously written about how the ATO intends to use information it gathers as a result of Single Touch payroll to assist it identify PAYG Tax and superannuation which is not being paid and then take recovery action.
The ATO has now advised that it is using this information, to take these steps.
James O’Halloran, Deputy Commissioner, Superannuation and Employer Obligations, announced on 14 October 2019:
“We have recently completed an examination of SG contributions of some 75 million payment transactions for quarters one, two and three of 2018–19 for some 400,000 employers. We’re currently examining the payment transactions and patterns for quarter four of 2018–19. As you would know, this was only an aspiration few years ago.
From this data, we can already see that between 90% and 92% of contribution transactions by volume were paid on time and that between 85% and 90% of the transactions by dollar value were paid on time.”
Mr O’Halloran went on to advise that in the next week the ATO would contact 2,500 employers who had either underpaid or failed to pay superannuation during early to mid-2019. This is the first direct use by the ATO of single touch payroll data to identify such non-compliance with superannuation payment requirements.
Should these businesses fail to comply with their obligations, which are now to lodge a Superannuation Guarantee Charge Statement and then pay superannuation to the ATO as SGC, then the ATO will take recovery action, including issuing Director Penalty Notices and Garnishee Notices. Given recent amendments to timeframes to lodge Superannuation Guarantee Charge Statements to avoid Lockdown Director Penalty Notices, any Director Penalty Notices issued for this superannuation will be Lockdown notices, as the superannuation was not paid for the June 2019 quarter and earlier.
Risk now for small businesses
Most of the 2,500 employers identified by the ATO as failing to meet their superannuation payment requirements would have been employers with 20 or more staff, as Single Touch Payroll obligations did not apply to smaller businesses until 1 October 2019.
However, now that Single Touch Payroll has started to apply to smaller businesses, the ATO will shortly start looking at their compliance and begin the process of notifying them of unpaid superannuation and failing a satisfactory arrangement to pay superannuation being put in place, begin taking recovery action.
What can you do?
Even though the ATO is aware of your businesses’ unpaid superannuation you still need to lodge a Superannuation Guarantee Charge Statement if you don’t pay superannuation on time to avoid the risk of Lockdown Director Penalty Notices.
The inability of a business to pay superannuation is often a warning sign that the business is in financial difficulty. This doesn’t necessarily mean the business will be placed in liquidation, however, it does mean that you should consider getting advice about strategies which may be put in place and the risks involved.