Australian Tax Office criticised for failing to prevent $5.6 billion loss in superannuation

THE Australian Taxation Office has been slammed for failing to stop the ‘theft’ of as much as $5.6 billion a year in workers’ superannuation.

Tracy Halliday missed out on $90,000 superannuation plus investment earnings after she wasn't paid super for 11 years.

EXCLUSIVE

THE Australian Taxation Office has been slammed for failing to stop the “theft” of as much as $5.6 billion a year in workers’ superannuation.

A new Senate report says there is overwhelming evidence the ATO spends too much time sitting on its hands waiting for workers to file a complaint and not enough ensuring employers were meeting their obligations.

It is also too slow.

The economic references committee’s report highlights one case where a group of workers who complained to the ATO heard nothing for three years. The workers then got a letter telling them the company had gone into liquidation and the ATO could do nothing for them.

The committee took evidence that as many as 2.76 million employees across Australia are underpaid $5.6 billion in super annually.

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Chris Ketter says the ‘the ATO needs to get off its backside’. Pic Annette Dew

That’s about $2000 per affected person per year. Over a decade, the retirement savings shortfall would be more than $100 billion.

The ATO says these figures are an over-estimate, but has no estimates of its own.

It does know that it collected $340 million of unpaid super in 2015-16.

Committee chairman and Labor senator for Queensland Chris Ketter said the ATO has about 500 people working on matters including compliance and recovery; by comparison, a 55-person service run for nine super funds collected two-thirds of what the ATO did.

“I am deeply troubled by the findings of the report,” Senator Ketter told News Corp Australia on Tuesday night.

“The ATO needs to get off its backside.”

The committee recommends the tax office consider transferring some of its compliance and recovery responsibilities to the Fair Work Ombudsman and that the two agencies improve information sharing.

It also suggests employees be allowed to take private legal action against their employer, which can’t happen at the moment.

And employers who deliberately and repeatedly dodge their responsibilities to pay super should be hit with heftier penalties.

According to expert evidence to the committee, directors can liquidate a company without paying super and face no personal consequences.

The company can then spring back to life.

An interim report on superannuation non compliance from a multi agency working group set up by Minister for Revenue and Financial Services Kelly O’Dwyer has not been released.

Ninety-seven per cent of complaints about unpaid super were against small businesses.

The four industries where the problem is most common are construction, manufacturing, retail and food/accommodation services.

The Australian Restructuring Insolvency and Turnaround Association told the committee that money that should be paid into workers’ super accounts became an “an easy source of ‘funding’ when a business enters some form of financial distress”.

In December 2016, Minister for Revenue and Financial Services Kelly O’Dwyer set up a

“multi-agency working group” to investigate ways to tackle with superannuation guarantee noncompliance.

The working group, which is chaired by the ATO, was due to deliver an interim report in March. It has not been released.

The economic references committee urged the Government to make the report public.

‘THEY JUST SCREWED ME’

Tracy Halliday believes the stress of discovering she hadn’t been paid super for 11 years caused a brain aneurysm.

Mrs Halliday was dudded of $90,000 in guarantee contributions by the owners of an Adelaide business she worked for as general manager until 2012.

Tracy Halliday, who missed out on $90,000 of superannuation plus investment earnings after she wasn't paid super for 11 years. Picture: News Corp

“I was the best employee you could ever get and they just screwed me,” she said.

Her payslip purported to show super was being paid.

But it was not.

And she was not the only one being ripped off.

When the truth emerged, the directors put the business into receivership then continued operating it in their wives’ names, she said.

“It got so stressful I had an aneurysm.

“While I was in hospital, that’s when it went into receivership.”

Mrs Halliday likens what happened to theft.

She said she called the Australian Taxation Office up to 40 times but her efforts were in vain.

“The ATO are the wrong people to police it because they are too busy chasing their own money,” she said.

Mrs Halliday believes super funds should play a greater role in ensuring the contributions are being paid.

Originally published as Australian Tax Office criticised for failing to prevent $5.6 billion loss in superannuation