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Michael Murray’s on-going commentary on issues in corporate and personal insolvency law and related policy and law reform, in Australia and internationally. Given the scope of insolvency, this extends to business, consumer and professional conduct, and ethics, governance and regulation, criminal, tax, environmental and administrative law, and the courts and government.

 

Unpaid super – just rounding up the usual suspects

A Senate Committee has produced yet another typical report that goes round in the usual circles of recommending the implementation of previous recommendations – director identity numbers, more ASIC and ATO exchanges of information, and more “enforcement” and “resources” for the regulators. These are all the familiar and usual suspects in Committee reports, with pliant media in tow.  

Reform lies in technology which idea the Committee embraced – moving from the ‘paper age’ to the ‘digital age’ will enable a greater focus on proactive methods – but with no real digital proactivity recommended.     

The nub of the report’s limited usefulness is its reference to the digital age process of single touch payroll (STP),  by which the employer is relieved of the task of paying the employees’ taxes and super, with the ATO simply extracting the payments up front from the employer’s cash. As the Melbourne and Monash academics have explained, this is how STP was initially proposed.  

However, in light of the usual “concerns from the business community” about removing businesses’ access to the interest free ATO money on which they rely for their cash flow, the STP proposal was later watered down to only cover the reporting, not payment, of tax and superannuation obligations, and then only for larger employers.  Such routine objections that wages are generally paid fortnightly while PAYG and superannuation are usually remitted monthly or quarterly seem to have been enough for the government to back off.

As the academics say

“The objection raised shows the extent to which businesses rely on employee-related sums – ‘their money’ until it is legally payable – to finance their businesses, and also shows the hesitation of the government to interfere with this practice”.

If the government wants to address unpaid super and a range of other such tax and competition issues, it has to “interfere” with the expectation that employers have access to this money, now a decades long expectation but one that is not warranted in this century.  It is easy enough to blame the ATO, when the responsibility lies up the line.

As much as the Senate Committee tentatively suggested, it was that

“the government give consideration to whether STP should require both the reporting and payment of tax and superannuation obligations”.

Wow. 

The cute title of the report given by the Senate Committee – “Superbad” – is apt.

 

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