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Tuesday, 8 March 2005
Page: 127

Senator Brown asked the Minister representing the Treasurer, upon notice, on 17 November 2004:

With reference to the Australian Taxation Office and the non-payment of superannuation contributions by small business: Why is the system structured in such a way that small business are able to avoid paying superannuation contributions by using such strategies as changing their corporate identities every few years.

Senator Minchin (Minister for Finance and Administration) —The Treasurer has provided the following answer to the honourable senator’s question:

All employers should make sufficient superannuation contributions to a complying superannuation fund for their eligible employees on a quarterly basis. Where an employer fails to pay the required amount of superannuation by the due date they become liable to pay the superannuation guarantee (SG) charge to the Australian Taxation Office (ATO).

Employers are responsible for self-assessing their liability to pay the SG charge. The ATO has in place a comprehensive compliance program with a view to ensuring employers meet their SG obligations.

The ATO is unable to disclose specific information about its actions in trying to secure employer superannuation support as it relates to the affairs of another taxpayer. While this is frustrating to employees who may not have received their correct superannuation entitlements, it is essential that the ATO protect the rights of all parties.

I wish to emphasise that the ATO contacts all employers who are the subject of complaint and requests that they provide the name of the fund into which the contributions have been paid. The ATO will then check with the fund and make further contact with the employer in the event that the fund does not have a record of contributions having been made. Employers who refuse to co-operate with the ATO or provide misleading information risk prosecution and substantial penalties.

Consistent with the Government’s 2001 election commitment, employers have been required to make at least quarterly superannuation contributions on behalf of their employees since 1 July 2003 or incur the SG charge. These arrangements are designed to ensure fairness between employees and to encourage employers to make regular superannuation contributions. Quarterly contributions will benefit employees in a number of ways, including lower employee exposure to the loss of superannuation benefits in the event of employer bankruptcy or insolvency.

The Government is committed to preventing persons and companies abusing the corporate form by using phoenix-like strategies (such as changing corporate identity) to avoid debts, including tax and superannuation contributions. Both the Australian Securities and Investments Commission (ASIC) and the ATO are actively pursuing companies and individuals that engage in phoenix company activity.

The Government has implemented a number of initiatives to greater combat phoenix activity. Recently it implemented recommendations of the Cole Royal Commission by:

   -       increasing from 10 to 20 years the maximum period of disqualification of persons from managing corporations for insolvency and non-payment of debts; and

   -       forming a Working Party consisting of representatives from ASIC, ATO, State and Territory revenue agencies and the Privacy Commissioner to improve information sharing between agencies, which will facilitate greater identification of phoenix offenders.

Additionally, the Government has provided additional funding for ASIC of $12.3 million over four years for a program directed at targeted surveillance of insolvency-related misconduct by company officers, including phoenix company activity.