Don’t rely on the ATO to chase your lost super

There are many things you can rely on the Australian Tax Office to do but ensuring your boss has paid your superannuation is not one of them.

You probably can rely on them to catch that bit of income you forgot to declare, to deny any deductions you are not entitled to, pay your refund or to pick up any capital gains you forgot to mention.

But by their own admission, the ATO is doing a fairly poor job of ensuring bosses pay the right amount of superannuation on time.

A damning Australian National Audit Office check of how the ATO is doing in ensuring super is paid found that rather than proactively hunting down employers who fail to pay super, the ATO is using a “low-touch nudge” approach.

Most lost super stays that way

As a result, only 15% of the unpaid superannuation was collected by the ATO each year, which means some employers are effectively getting a $4.5 billion annual interest free loan from their employees – a loan which may well turn into a gift.

The situation is about to get much worse, with the 1 July removal of the $450 minimum monthly threshold for compulsory employer super payments set to add hundreds of thousands of extra workers to the superannuation system.

With Industry Super Australia estimating that about a quarter of employees suffered from unpaid super, that is a really big problem that is being effectively ignored.

Tough new enforcement laws untested

The audit report found that the ATO was only partially effective in its efforts to recoup lost superannuation and encourage employers to pay super.

That came despite the ATO making a commitment to be proactive in 40% of compliance cases in the three or four years to 2020-2021.

In a real “dog ate my homework” excuse, the ATO instead actually reduced its proactive compliance measures after the super guarantee taskforce was introduced in 2017, moving away “from resource-intensive audit activity to low-touch nudges”.

There were enforcement pauses during the bushfires and COVID-19 pandemic with a result being that the ATO’s stronger enforcement powers “have largely not been exercised”.

Such poor compliance efforts meant that between 2013-2014 and 2018-2019, ATO compliance activities amounted to less than 15% per year of the estimated amount of unpaid super.

Members need to be proactive about unpaid super

There is not much we can do about such a poor performance by one of our major institutions but there are many steps that every individual can take to ensure their super is being paid.

It is particularly important that young people and those on low incomes ensure their super is being paid because of the power of compounding over long time period even for small amounts.

The first thing to do is to get engaged with your super fund by logging into your super account and then check that the super payments you have received match up with what is shown on your pay slips.

Super payments only need to be made every three months so the pay slips you need to cross-reference may be older than you expect.

Super payments should be 10% of your gross pay excluding overtime as long as you are earning above $450 a month and are aged 18 or more.

If you think there is a problem with your super payments, it is a good idea to check with workmates to see if they are having similar problems.

Then it is time to check with your employer and/or your super fund and even your union if you are a member.

If none of that produces a good outcome and you are still convinced you are being short-changed of your super, you can contact the ATO to make a confidential tip-off.

Hopefully by then this scathing audit report will have revved up enforcement activities enough to help you out.