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Employers who short-change employees targeted in new law

It has been announced that the Federal Government will be seeking to introduce new legislation which tightens the rules around superannuation as means to close a current loophole which enables dishonest or ‘unscrupulous’ employers to short change their employees who choose to make additional salary sacrifice contributions into their superannuation accounts.

Under current legislation, an employer is legally able to withhold the salary sacrifice contributions made by their employees for a period of up to four months prior to transferring the money into the nominated superannuation account. By using this loophole, it is reported that some employers have been reducing their compulsory 9.5% super contributions through basing their contributions on the employee’s salary amount less their voluntary sacrifices. Up to about 360,000 employees are believed to have been impacted by this salary sacrifice loophole in 2016.


Following recommendations that have been made by the Superannuation Guarantee Cross Agency Working Group (made up of senior representatives from the ATO, the Treasury, the Department of Employment, ASIC and APRA), the Minister for Revenue and Financial Services, Kelly O’Dwyer, has stated that the Turnbull Government will introduce a Bill into Parliament this year. O’Dwyer acknowledges that for employees to continue to have confidence in the integrity of the superannuation system “we must ensure employers are paying workers their full entitlements, whether they are wages or superannuation”. As such, the purpose of the new Bill will be to ensure that an individual’s salary sacrifice contributions do not reduce their employer’s superannuation guarantee obligation.


In addition to the introduction of new legislation, the Superannuation Guarantee Cross Agency Working Group’s ‘Superannuation Guarantee Non-Compliance report’ has been released. This report makes a number of targeted recommendations for improving an employer’s compliance with their superannuation guarantee obligations. These recommendations are currently being considered by the Turnbull Government who is seeking to ensure that any increased measures will improve the levels of compliance but without creating excessive burdens for employers.

Information in HR Advice Online guides and blog posts is meant purely for educational discussion of human resources issues. It contains only general information about human resources matters and due to factors such as government legislation changes, may not be up-to-date at the time of reading. It is not legal advice and should not be treated as such.

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