The Australian Taxation Office (ATO) has admitted it currently has no way of knowing whether employers are rorting their employees’ salary sacrifice arrangements to give the appearance of meeting their superannuation guarantee (SG) obligations.
In an answer to a question on notice to the Senate Economic Committee inquiry into non-payment of the SG, the ATO said it did not have data to indicate if, or to what extent, employers are using their employees’ salary sacrifice amounts to meet their SG obligations.
Further, it said it did not have data to show if the practice was occurring and what amount of salary sacrifice contributions were being used.
“Employers are required to report contributions made under a salary sacrifice agreement as ‘Reportable employer super contributions’,” the ATO said. “Specific salary sacrifice amounts cannot be distinguished from other items reported under this category, such as additional amounts paid to an employee’s superannuation fund as an annual bonus or employee negotiated increases in employer superannuation contributions.”
The tax office said a broad analysis of complaints and compliance cases had not identified such behaviour as being an issue bought to the attention of the ATO.
This is actually not a rort at all – that’s just a headline. It’s a feature of SG in the context of salary sacrifice arrangements and has been since SG was introduced. Also remember the ATO is forgoing tax by allowing funds to be diverted by salary sacrifice. Always a feature in my salary packaging software when sg was introduced, was a choice of calculating SG on gross or nominal salary or on actual salary paid after salary sacrifice. I sort of wonder how it’s a headline twenty plus years later… Any advisor recommending salary sacrifice would of course have alerted his clients to this and had it all contracted with the employer when the arrangements were made. Didn’t you????
When the ATO rips the employees super funds off them, in the process cancelling their often irreplaceable insurance cover, they should be able to work it out then. $1 Billion to disappear into Govt coffers this next round…lol