Chartered Accountants Australia and New Zealand, CPA Australia, Institute of Public Accountants, SMSF Association, The Tax Institute and the Financial Advice Association Australia welcome the opportunity to make a submission to the Treasury in relation to the consultation paper titled ‘Securing Australians’ Superannuation’.

The Joint Bodies support the Government’s proposed policy of introducing Payday super. However, the shift to a Payday super model represents a significant departure from the current SG regime and the operation of the Superannuation Guarantee Charge.

The proposed policy changes will impact a wide range of legislative provisions, employers’ compliance requirements, the onboarding of employees with an employer, payment and reporting systems and processes, services provided by intermediaries (including payroll providers, clearing houses and practitioners), and administration by the Australian Taxation Office.

The ATO’s latest tax gap estimates for 2020–21 show that the net gap for Pay as you go (PAYG) withholding is 1.7% ($3.871 billion), while the SG gap is 5.1% ($3.619 billion). While the majority of employers do the right thing (almost 95% of SG payments that were due were paid), the figures show that more than $3 billion a year remains unpaid. Securing employees’ superannuation entitlements is paramount.

It follows that a well-designed system should appropriately penalise and seek to deter those who are non-compliant but not discourage employers from self-correcting or disincentivise voluntary disclosures of SG shortfalls. The size of the SG tax gap illustrates that more is needed to encourage employers to meet their obligations, to close the gap.