In Detail
Although the recent escalation in regulatory SG compliance activity could be viewed as sudden, this was an expected initiative. Following the SG Amnesty and the extent of underpayments reported, SG compliance was identified as a parliamentary priority, with the Federal Government having commissioned the Australian National Audit Office (ANAO) to conduct an audit of the ATO's performance as SG administrator. In its April 2022 report, the ANAO made three key recommendations: (1) implement a preventive and proactive approach to SG; (2) assess performance against public accountability and targets; (3) utilise more efficient forms of enforcement and debt recovery.
These three key recommendations are at the core of the Federal Budget and ATO Corporate Plan measures - the preventive and proactive approach to SG will be data-led, with clearly outlined performance indicators that the ATO can be measured against, including in respect of debt-recovery of shortfalls.
In her keynote speech at PwC’s Payroll Leaders’ and Employment Taxes Forum in November 2022, the ATO’s Deputy Commissioner for Superannuation & Employer Obligations, Ms Emma Rosenzweig, had foreshadowed this program of work. Specifically, in relation to data analysis, she flagged that the ATO will ‘increasingly use STP information at scale and in more automated ways’, noting that STP data ‘also highlights where there are areas that need our attention, and those employers we need to engage with’.
In terms of key deliverables for the ATO’s ‘SG integrity’ focus, the recently-released Corporate Plan notes these as being:
- ‘Continue work to create a transparent view of employees’ SG for all funds and all employers in one place, to support the ATO to follow up employer non-compliance more proactively
- Improve nudges to support employers to self-correct SG issues and keep track with their obligations
- Continue to focus on employer and superannuation fund reporting timeliness, completeness and accuracy
- Include new measurements of SG charge raised, collected and distributed in the annual report’.
With respect to the last mentioned point, the emphasis not only on raising SGCs, but also on collection and distribution, is reflected in the ‘Address collectable debt’ focus of the ATO, including the following key deliverables:
- ‘Apply differentiated strategies and targeted interventions to address collectable debt
- Optimise allocation of effort to strengthen debt prevention and recovery, including expedited stronger actions for clients with capacity to pay
- Improve client segmentation to better reflect predicted payment behaviours, with differentiated treatments designed to accelerate payment outcomes
- Set clear expectations and promote transparency of debt recovery approaches to clients and intermediaries, including potential firmer action consequences where clients do not engage’.
As evident from these key deliverables, the regulator has placed a premium on shortfall recovery, with a change in tact towards enforcement and urgency, comprising:
- ‘targeted interventions’;
- ‘expedited stronger actions’; and
- ‘potential firmer action consequences’.
Relevantly, for the recent data-led audits, we have observed some insight into this change, namely instances of the ATO issuing communications comprising DPWNs and/or warnings regarding reporting employers to the credit reporting bureaus for unpaid debts.
