The Australian Taxation Office (ATO) has shown up on the Australian National Audit Office (ANAO) radar as having three superannuation-related issues which rate as so-called “Category A” significant risk matters.
An ANAO report on financial reports of Australian Government Entities, tabled in Parliament earlier this month specifically pointed to the ATO’s handling of superannuation surcharge exceptions, the monitoring of unfunded defined benefit (UDB) superannuation funds and the implementation of the new superannuation guarantee charge regime as being “Category A” issues.
Each of these issues have been previously reported by the ANAO, but this represents the first occasion on which they have been categorised as posing a significant risk.
Dealing with the superannuation surcharge exception issue, the ANAO said its audit opinion on the ATO financial statements was qualified in 2003-2004 due to uncertainties over the estimated balance for superannuation surcharge exceptions.
It said the ATO had a significant backlog of exceptions that required action through manual or electronic intervention with the backlog having built up over the last eight years with the total number of exceptions reaching 10.4 million as at June 30, 2004.The ANAO said it was acknowledged that action was in progress to clear the backlogs with the ATO having sought and received legal advice on whether it can in certain circumstances decide not to issue superannuation surcharge assessments.
Dealing with the monitoring of UDB superannuation funds, the ANAO said the ATO issued superannuation surcharge assessments to all members of UDB superannuation funds.
“For those assessments that are deferred, the superannuation funds are required to maintain a surcharge debt account for each member, collect the surcharge, and remit collections to the ATO. One of the reasons for qualification of the 2003-2004 ATO financial statements was due to the fact that the portion of the receivables balance relating to the superannuation surcharge – UDB could not be confirmed,” it said.
“As was the case in 2002-2003, a comparison of the UDB receivable as per the ATO records with the information received from the UDB superannuation funds identified a number of variances,” the report said.
IT said the ATO had advised the ANAO that the UDB superannuation funds’ compliance with legislation had been noted as a concern and action would be taken to establish processes to ensure that the debts were managed appropriately.
On the question of the new superannuation guarantee charge regime, the audit report said that as a result of major errors in the new superannuation guarantee system introduced in November 2003, the ATO had been unable to issue superannuation guarantee assessments since February 2004 or make superannuation guarantee payments to employees’ superannuation funds since November 2003.
It said the ATO developed a methodology to estimate the revenue and payments for 2003-2004 financial statements that would have been raised if there had not been any system problems.
However, the report said uncertainty relating to the completeness and accuracy of data used in calculating the revenue and payment estimates, resulted in the qualification of the audit opinion on the 2003-2004 financial statements.
It said the ATO had advised that the superannuation guarantee system was now appropriately processing current transactions.
