1.1 This is the report on the review conducted by the Inspector-General of Taxation (the IGT) into the ATO's administration of the Superannuation Guarantee Charge (SGC). This report is pursuant to section 10 of the Inspector-General of Taxation Act 2003 (the IGT Act).
1.2 On 2 June 2009 the IGT announced terms of reference for this review. The terms of reference followed concerns expressed by stakeholders with the general level of Superannuation Guarantee (SG) compliance and, in particular, the ATO's timeliness and responsiveness to employee complaints regarding the non-payment of SG. Concerns were also expressed about the adequacy of the ATO's enforcement action and monitoring and the level of outstanding SGC collected.
1.3 This review examined the ATO's administration of SGC including identifying the level of non-compliance and assessing the ATO's non-compliance detection mechanisms and approaches following detection.
1.4 The IGT sought input and submissions from the community to understand employee, employer and superannuation funds experience and perspectives in relation to the administration of the SG system.
1.5 The review considered the ATO's:
- risk assessment strategies for SG and its implementation of strategies to improve compliance;
- communication strategies with employees raising concerns with their employer's compliance, the timeliness of actioning employee notifications and the level of information provided about the collection of unpaid superannuation; and
- timeliness in collecting unpaid SGC.
1.6 The aim of the review was to identify and recommend changes that will assist the ATO to improve the early identification of SG shortfalls, the timely handling of employee complaints and the prompt collection of outstanding SGC.
1.7 Sincere thanks are extended to the Association of Superannuation Funds of Australia, the Australian Council of Trade Unions, Industry Super Network, Industry Funds Credit Control, Australian Institute of Superannuation Trustees, Construction Forestry Mining and Energy Union, Community and Public Service Union and the Taxation Institute of Australia who prepared written submissions for this review.
1.8 The IGT would also like to thank the Commonwealth Ombudsman, superannuation funds, tax practitioners, and individual taxpayers who prepared written submissions or participated in this review.
1.9 The IGT acknowledges the cooperation of the Commissioner of Taxation and his staff in this review.
Structure of the Report
1.10 A summary of the key findings, conclusions and recommendations for this review is provided in Chapter 2.
1.11 A brief description of the development of employer superannuation contributions, the purpose and role of the SG system and the operation of the SGC are set out in Chapter 3. It also describes the ATO's current management approaches regarding SG.
1.12 SG compliance is discussed in Chapter 4 including an examination of the types and level of non-compliance, the ATO's SG compliance approaches and results and the interactions and information flow amongst key stakeholders in the SG system.
1.13 The handling of employee notification complaints, which are the primary source of ATO audit activity, are considered in Chapter 5 including the ATO's efforts to improve its timeliness and responsiveness in actioning these complaints.
1.14 The key leverage points in the SG system to enforce employers' SG obligations and deter non-compliance including Part 7 penalties and prosecution action are examined in Chapter 6.
1.15 Finally, the ATO's processes and timeliness in collecting unpaid SGC are set out in Chapter 7. It also examines the ATO's SGC debt collection results and discusses the IGT's findings for fieldwork undertaken in the course of the review.