A.2.1 This Appendix sets out the recommendations that were made for the previous Government's consideration.
Review into the ATO's administration of the Superannuation Guarantee Charge
A.2.2 In the Review into the ATO's Administration of the Superannuation Guarantee Charge, the following five recommendations were made for the previous Government's consideration, either in whole or in part.
The Government consider providing employees with more timely information regarding whether their employer has paid SG by the due date, by having employers, on a quarterly basis, include on each employee's payslip their ordinary time earnings for SG purposes and the amount of SG actually paid to the employee's superannuation fund or the ATO. This will also assist in reducing the timeframe between when a SG shortfall arises and when an employee lodges an EN complaint with the ATO.
A.2.3 On 21 September 2011, the then Government announced its intention to require employers to disclose on employee payslips when SG contributions were due to be paid and, therefore, provide early warning to employees if superannuation entitlements were not paid.117 Legislation which gave effect to this intention became law on 27 June 2012.118
The Government consider improving the current payment and information systems for SG obligations to allow the ATO to undertake more real-time monitoring and rapid follow up of high-risk employers, particularly micro-businesses.
The payment and information systems should have the following features:
- Capturing the following details for each employee: name, tax file number, ordinary time earnings, amount of superannuation contribution paid by employer, superannuation fund and member number;
- ATO to have access to this data on a quarterly basis; and
- Compulsory requirement for all employers in high-risk segments to participate in the system rather than it being optional.
In a manner that minimises compliance obligations, the ATO should also engage superannuation funds and clearing houses to obtain information for the purposes of identifying potential SG non-compliance.
A.2.4 On 7 January 2014, the Government announced its intention to shift the running of the small business clearing house from Medicare to the ATO commencing 1 April 2014.119 This clearing house allows small business employers to pay superannuation contributions electronically to one location. Once the correct amount is paid to the clearing house, the small business is discharged of their obligations.120
The Government consider whether the current multi-faceted and complex penalty system applying to SG (such as non-deductibility of SGC, the application of nominal interest and the administrative component from the beginning of each quarter and Part 7 penalties) should be streamlined and better targeted to improve voluntary compliance.
To bolster the Part 7 penalty regime as part of an effective deterrent against non-payment of SG entitlements, and give greater importance to the lodgement of SGC Statements, the ATO should revise its policy and administration of the penalty regime to ensure it strikes an appropriate balance between:
- Discouraging the non-lodgement of SGC Statements by imposing penalties at a more meaningful level; and
- Recognising the need for appropriate remission in circumstances where the non-lodgement was due to circumstances outside the employer's control.
The ATO should seek to more widely publicise the outcomes of its application of Part 7 penalties to deter non-compliant behaviour but in a way that protects taxpayer secrecy.
To bolster SG prosecution action as part of an effective deterrent against non-payment of SG entitlements the Government consider whether the ATO should be afforded greater prosecution powers (such as the ability to seek the imposition of civil pecuniary penalties) where an employer does not pay SG and fails to cooperate with the ATO.
In the event that the ATO is given greater prosecution powers, the ATO should implement a media strategy that is designed to maximise the compliance leverage effect by raising the coverage and profile of SG prosecution cases.
Notwithstanding being granted these further powers, the ATO should adopt a stronger prosecution strategy for the more egregious and high-risk employers and should also finalise and publicly release its revised SG prosecution strategy and implementation plan.
To better protect employees' SG entitlements, improve deterrence against SG non-compliance and provide greater transparency of the cost of SG non-compliance on future age pension outlays, the Government consider:
- Expanding the director penalty regime to apply to unpaid SGC liabilities of the company; and
- Expanding GEERS to cover unpaid SGC liabilities where a company has been placed into liquidation and the ATO has not been able to recover against the directors personally.
A.2.5 On 5 July 2011, the then Government announced consultation on draft legislation intended to secure workers' superannuation and apply broadly to directors' obligations to cause their company to pay certain tax liabilities and superannuation guarantee amounts for employees'.121 The amending legislation became law on 29 June 2012, with operational commencement from 30 June 2012.122
Review into the non-lodgement of individual income tax returns
A.2.6 In the Review into the Non-lodgement of Individual Income Tax Returns, the following three recommendations were made for the previous Government's consideration.
The Government should refer the review's findings and the results of the community survey to the Henry review of Australia's future tax system for consideration in that broader context, noting that the Henry Review has specifically sought input in this area.
The Government should increase support to the Tax Office in making key improvements to the availability and usefulness of third party data used to identify non-lodgers and for other lodgement compliance activities. This could include new legislative requirements, new arrangements with Commonwealth agencies, and agreements by the states and the territories for third party data to:
- include unique identifiers such as a TFN or ABN
- where possible be an electronic transmission
- be promptly provided to ensure the currency of the information
- determine whether a taxpayer was in or out of Australia.
The Government should consider strengthening the failure-to-lodge penalty regime and, in particular, increasing penalties for high-risk taxpayers.
Review into the underlying causes and the management of objections to Tax Office decisions
A.2.7 In the Review into the Underlying Causes and the Management of Objections to Tax Office Decisions the following recommendation was made for the previous Government's consideration.
The Government should consider improving the objection system established by Part IVC of the Taxation Administration Act by ensuring that the objections process can only be used for genuine disputes arising from amended assessments, default assessments, private binding rulings or where the Commissioner has failed or refused to make a decision in relation to a matter in dispute. All other requests, regardless of whether the taxpayer labels them as objections, should be treated as self amendment requests.
Taxpayers' rights should be preserved by allowing the Commissioner to extend the period in which a taxpayer may amend their tax return.
117 Bill Shorten (Minister for Financial Services & Superannuation), 'A Better Deal for Superfund Members' (Media Release No 131, 21 September 2011).
118 Tax and Superannuation Laws Amendment (2012 Measures No. 1) Act 2012.
119 Bruce Billson (Minister for Small Business) and Arthur Sinodinos (Assistant Treasurer), 'Life Made Easier for Small Business' (Media Release, 7 January 2014).
120 Chris Bowen (Minister For Human Services Minister For Financial Services, Superannuation and Corporate Law) and Craig Emerson (Minister For Small Business, Independent Contractors and the Service Economy Minister for Competition Policy and Consumer Affairs Minister Assisting the Minister for Finance on Deregulation), 'Cutting Red Tape for Small Business — Superannuation Clearing House Service' (Media Release, 6 November 2009).
121 Bill Shorten (Minister for Financial Services & Superannuation), 'Countering Fraudulent Phoenix Activity by Strengthening Company and Directors' Obligations' (Media Release, No 101, 5 July 2011).
122 Tax Laws Amendment (2012 Measures No. 2) Act 2012.