It pays to check on your super

Workers should be vigilant in ensuring employers are paying the 9 per cent compulsory superannuation, as more employers are failing to make the payments because of weaker business conditions.

Bruce Quigley, a second commissioner with the Australian Taxation Office, told a conference recently that of 6000 high-risk employers reviewed under the office's employer obligations audit program since July 1 last year, almost 3000 had not met their superannuation guarantee obligations.

The Tax Office says its 2008-09 compliance program for the superannuation guarantee charge (SGC) found that employers in hairdressing and beauty, engineering design and consulting and building and industrial cleaning were at higher risk of not meeting their super obligations.

The Tax Office has said in the past that non-compliance is more likely in smaller businesses with fewer than 10 employees.

Quigley said that in tough times, employers were tempted to retain the super payments and income tax to help with cashflows and keep the business afloat.

"When businesses start to experience difficulties, they should contact us as soon as possible to work out a better, fairer strategy to address their financial problems," he said.

"Using money that is an entitlement of their employees is not the answer and is only going to land them in hot water down the track."

In 2008-09, the Tax Office raised $123 million in SGC liabilities from very small businesses.

In July this year, unions criticised the Tax Office for what they said was its tardiness in chasing up SGC payments to workers.

In a joint submission to the Inspector-General of Taxation's review into SGC, the Australian Council of Trade Unions and the Industry Super Network said the amount of outstanding super payments could be nearly $1 billion.

The submission questioned whether the Tax Office had enough resources directed at recovering superannuation guarantee payments.

The submission said that as many as a third of employees, or 2.5 million people, may be affected by at least underpayment of their super entitlements. In his conference speech, Quigley said that collection of superannuation guarantee payments was a "top concern of ours".

He said the Tax Office had reduced the time it took to investigate complaints and had increased its data matching to catch employers not meeting their obligations.

Employers must pay super to employees who are eligible.

To be eligible, the employee must be aged 18 years or over and under 70 and paid at least $450 (before tax) in a calendar month.

It doesn't matter if the employee works casual, part-time or full-time hours.

Employees under 18 are eligible if they meet the additional requirement of working more than 30 hours a week.

The employer must pay a minimum of 9 per cent on a worker's ordinary hours of pay into the worker's super fund at least once each quarter.

Quigley also highlighted how employers were increasingly treating their employees as contractors so that they could cut costs in terms of workers' compensation, payroll taxes and the superannuation guarantee.

He gave the example of a chain of five pizza restaurants that was paying staff in cash. No tax was withheld under PAYG and the superannuation guarantee was not paid. Staff were not asked to complete tax file number declarations.

Quigley said in cases like this, the Tax Office reminded the employer of its obligations to withhold tax under PAYG and to pay superannuation for its workers and made clear the expectation that the company would comply with its responsibilities in the future.

"We also tell them that we will be monitoring their compliance and, where it appears they aren't meeting their obligations, we will be back and will impose penalties," he said.

"Where employers continue to disregard their responsibilities, they will be treated more severely by prosecution where warranted."

The Tax Office says employees who suspect their super guarantee is not being paid should first talk with their employer. They should ask how often they are paying the super, into which fund the contribution is being paid and how much they are paying into the fund.

If the answer is unsatisfactory, employees should check the most recent member statement from their super fund or contact the fund to confirm that their employer has paid their super.

If the employer is not paying or is underpaying the superannuation guarantee, or it is not being paid into the employee's chosen fund, employees can lodge a complaint with the Tax Office by phoning 131 020.