Latest News

Hot Issues
spacer
Estate planning considerations
spacer
5 checklists to support your business
spacer
Are you receiving Personal Services Income?
spacer
What Employment Contracts Does My Small Business Need?
spacer
The superannuation changes from 1 July
spacer
Hasty lodgers twice as likely to make mistakes, ATO warns
spacer
Landlords who ‘double dip’, fudge deductions in ATO crosshairs
spacer
Most Spoken Languages in the World
spacer
Tax Time Checklists - Individuals; Company; Trust; Partnership; and Super Funds
spacer
Compare your business
spacer
2024 Year End Tax Planning Guide (Part 2)
spacer
ATO to crack down on rental income, WFH deductions this tax time
spacer
How to Draft a Standard Form Contract
spacer
GST, PAYG withholding a ‘significant portion’ of $50bn tax debt
spacer
ATO changes will make it harder for over 42,000 small businesses.
spacer
The Deadliest pandemics in History
spacer
Budget breakdown – Federal Government Analysis
spacer
Federal Budget 2024
spacer
Winners & Losers
spacer
2024 Year End Tax Planning Guide (Part 1)
spacer
Medicare levy surcharge OR basic health insurance ?
spacer
ATO warns of ‘serious penalties’ for unlawful tax scheme promoters
spacer
ACCC scam report
spacer
Employees taking more sick days - and it's getting worse
spacer
Foreign residents selling property in Australia
spacer
How much does negative gearing really cost – an overview and an opinion?
spacer
The Shortest-reigning Monarchs in History
spacer
FBT Reminder – Odometer Reading
spacer
ATO’s debts on hold campaign prompts new IGTO guidance
Article archive
spacer
Quarter 2 April - June 2024
spacer
Quarter 1 January - March 2024
spacer
Quarter 4 October - December 2023
spacer
Quarter 3 July - September 2023
spacer
Quarter 2 April - June 2023
spacer
Quarter 1 January - March 2023
spacer
Quarter 4 October - December 2022
spacer
Quarter 3 July - September 2022
spacer
Quarter 2 April - June 2022
spacer
Quarter 1 January - March 2022
spacer
Quarter 4 October - December 2021
spacer
Quarter 3 July - September 2021
spacer
Quarter 2 April - June 2021
spacer
Quarter 1 January - March 2021
spacer
Quarter 4 October - December 2020
spacer
Quarter 3 July - September 2020
spacer
Quarter 2 April - June 2020
spacer
Quarter 1 January - March 2020
spacer
Quarter 4 October - December 2019
spacer
Quarter 3 July - September 2019
spacer
Quarter 2 April - June 2019
spacer
Quarter 1 January - March 2019
spacer
Quarter 4 October - December 2018
spacer
Quarter 3 July - September 2018
spacer
Quarter 2 April - June 2018
spacer
Quarter 1 January - March 2018
spacer
Quarter 4 October - December 2017
spacer
Quarter 3 July - September 2017
spacer
Quarter 2 April - June 2017
spacer
Quarter 1 January - March 2017
spacer
Quarter 4 October - December 2016
spacer
Quarter 3 July - September 2016
spacer
Quarter 2 April - June 2016
spacer
Quarter 1 January - March 2016
spacer
Quarter 4 October - December 2015
spacer
Quarter 3 July - September 2015
spacer
Quarter 2 April - June 2015
spacer
Quarter 1 January - March 2015
spacer
Quarter 4 October - December 2014
Small businesses may ‘collapse under strain of payday super’, IPA warns

Existing issues within the SG system must be rectified before the government proceeds with the new changes, the IPA says.

.

The Institute of Public Accountants has told the government that the implementation of payday super should not proceed without system improvements being made first.

In its pre-budget submission, the IPA said the introduction of payday super is a significant departure from the existing arrangements where the payment of employees’ salaries and wages is separate from the payment of their super entitlements.

“Over 60 per cent of employers pay their SG contributions quarterly, so payday super will inevitably be one of the most significant changes to the superannuation sector since compulsory super began,” the IPA said.

 

The association said the existing SG system has many issues that need to be addressed so that they are not dragged into the new regime.

“PDS should not proceed without system improvements addressing the current identified drawbacks, otherwise we will be introducing additional unnecessary complexity into the new regime,” it stated.

 

“The use of SuperStream, clearing houses, super choice/stapling and remittance processes need to be refined and streamlined to support the move to near real time payment of SG.”

The submission noted that 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, and services provided by intermediaries such as payroll providers and clearing houses and administration by the ATO.

“As a result, every aspect of the policy and its impact needs to be carefully considered,” the IPA said.

“Otherwise, there is a high likelihood of significant and unintended consequences that may affect employers’ ability to comply with the PDS model.”

The IPA said processes within the current system must be improved as there is only a small window for error corrections to accommodate the more frequent payment of SG.

Cash flow challenges for smaller businesses

The association also warned that more frequent SG contributions will lead to higher costs for employers by way of processing costs and higher transaction and servicing costs.

“In addition, the cashflow consequences for employers cannot be ignored especially for small and medium businesses,” it said.

“The move to immediate payment may pose challenges during the transitional period where the old and new regimes overlap, and some entities, in particular smaller employers, may collapse under this strain, as the proverbial ‘straw that broke the camel’s back’ syndrome.”

Penalty regime for SG must be overhauled

The IPA is also calling on the government to change the current penalty regime for the late payment and underpayment of SG.

“We consider that the Superannuation Guarantee Charge (SGC) model in its current form is overly complex and punitive,” the IPA said.

“The design of the SGC and the associated penalties deter self-rectification, and they therefore operate as a disincentive for employers to voluntarily report and rectify historical shortfalls,” it said.

One of the key concerns, the IPA said, is the draconian application of penalties that do not proportionately reflect the loss to employees or the ‘culpability’ of an employer who is in arrears.

“Late payment penalties under the existing penalty regime for failure to make SG payments on time need to be revised,” the submission said.

“PDS represents an overdue opportunity to completely redesign the SG penalty regime, to make it simplified and less punitive for employers trying to do the right thing. It must deter bad behaviour, whilst encouraging employers to quickly identify and fix errors.”

 

 

 

 

07 February 2024
Miranda Brownlee
accountingtimes.com.au

Liability limited by a Scheme approved under Professional Standards Legislation.
© O'Brien and Partners 2022 - All Rights Reserved | 91 Station Street, Malvern VIC 3144 | Tel: 03 9509 3911 | Fax: 03 9509 3922. Site by Acctweb