Employers are required to provide minimum levels of superannuation support for most of their employees. These payments are called superannuation guarantee contributions. The contribution rate is currently 11.5% (as at 1 July 2024, with the next increase due 1 July 2025) of ordinary time earnings.

Non-payment and late payment of superannuation guarantee contributions is a common problem. Workers at risk of not being paid their full entitlements are low paid and non-unionised workers, in particular, workers in small businesses with high failure rates.

Enforcement through the Tax Office

Where employers fail to provide the minimum level of superannuation guarantee, the Australian Tax Office is responsible for collecting the unpaid superannuation (the superannuation guarantee shortfall plus interest) and distributing the money to the employees’ superannuation funds.

The superannuation guarantee charge

Employers who do not pay full superannuation guarantee contributions on behalf of their employees are required to:

If an employer fails to lodge a superannuation guarantee statement, the Commissioner of Taxation can issue a default assessment.

Other charges

The contribution rate is currently 11.5% of ordinary time earnings (as at 1 July 2024, with the next increase due 1 July 2025) [Superannuation Guarantee (Administration) Act 1992 s 19(2)]. Further interest also applies if the charge is not paid by the due date.

An employer cannot claim a tax deduction for superannuation contributions paid as the superannuation guarantee charge.

Disability and death payments

The payment and enforcement of superannuation contributions is particularly relevant to disability and death benefits. Insurance cover for these benefits usually lapses if superannuation contributions are not paid by an employer. To remedy this, some superannuation funds have moved to account-based premium deductions.

Notifying the Tax Office

An employee who believes that superannuation guarantee contributions have not been paid can notify the ATO by phone or complete a notification form online using the superannuation guarantee calculator.

What the Tax Office may do

The ATO may investigate the matter and, if appropriate, issue a superannuation guarantee charge assessment and seek to recover the charge from the employer. If an employer fails to pay the superannuation guarantee charge, the Commissioner for Taxation can sue for recovery. The Commissioner cannot seek to recover any death or disability benefits lost because of non-payment of superannuation contributions.

For further information refer to the ATO website: www.ato.gov.au.