Institute of Certified Bookkeepers

Business Leaders call for Simplified Superannuation Rules after SMEs Accused of Using Employees’ Super to Improve Cashflow

Confusion caused by Superfunds is a bigger contributor to the non payment of super than any other factor.

Businesses plan their cashflow. They plan to meet their obligations as and when they are due. They therefore plan to pay the amount of Super that has been accrued over a quarter by the date the Australian Law requires them to pay it, typically the 28th of the next month. They plan to pay their suppliers according to a schedule and they plan to pay their staff on pay day.

It is not fair nor reasonable to state "employers are using employees super to improve cashflow”. They are not liable to pay it until the due date!  They don't leave the money sitting in a bank account doing nothing when they could be generating more business and creating more economic activity! It is NOT the employee's money until it is due to be paid to the Superfund. The Superannuation Guarantee system was not created in a vacuum and was created with a payment system that the economy agreed to. Why do some (read Superfunds) suggest that this system was so wrong?

Employers have now factored in that employment incurs a Super Guarantee obligation in addition to wages and all other oncosts. They have factored in the cashflow impact. It is our position that you should leave this alone!

Employers stop complying or following a system when the system is so complicated it is overwhelming. SuperStream should have been a logical and systemised process easy for employers to adopt. Those that use a SuperStream gateway, preferably incorporated into their software, have a simple system and it is easy.

The complication starts when Superfunds start demanding monthly payment, when they start demanding nil remittance advices, when they engage legal firms to send threatening debt letters requiring payment of April's accrued super on or before the 1st May. (Yes we have samples of the large industry funds making this demand).

Employers are not the Super problem.  Superfunds with unreasonable, (if not illegal), requests are the problem.

Single Touch Payroll

The soon to be implemented Single Touch Payroll has in its design two factors that will help any perceived “employer” problem with managing their Super Guarantee obligations. Each PayEvent will report the amount of Super Guarantee obligation that has been accrued for each employee so far for the payroll year. In this way the ATO will finally have visibility of whether an employer is accruing super and eventually be able to clarify whether they should be accruing super.  The second factor is the reporting of the actual payment of the super by the employer. The design of this reporting is still in discussion. The aim is that the ATO will now have visibility of whether the employer is paying their super and will then follow up those employers that aren't. In theory problem solved. In practice problem at least managed.

One of the design models being discussed, made public at the recent Single Touch Payroll and Super Industry Engagement Forum, is that the Superfunds themselves will report the receipt of payment for each employee back to the ATO. On one hand this achieves the purpose - visibility of payments to the ATO.  On the other hand this places the funds in an interesting position. In our view it CANNOT and MUST NOT empower the superfunds to put even more pressure on the employers to pay earlier or in any different cycle or manner than is the current legal obligations, (i.e., once per quarter unless awards or employment agreements state otherwise).

We do not accept that Superfunds can bury clauses about earlier or more regular payments into Product Disclosure Statements or similar and then use that same fine print to then threaten the employers.

Call Out

Superfunds, get on board with SuperStream gateways as your only means of receiving super payments. This is simple for employers and employers will be somewhat more content with keeping it simple.

  • 11th April, 2017