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An industry superannuation lobby group has welcomed the government’s recent crackdown on a legal loophole used by unscrupulous employers to short-change employees but argues that it will only help one in 10 individuals.
Last week, Minister for Revenue and Financial Services, Kelly O’Dwyer, said the government will introduce a bill into Parliament this year that will ensure an individual’s salary sacrifice contributions do not reduce their employer’s superannuation guarantee obligation.
A report by Industry Super Australia last December revealed that the salary-sacrifice loophole affected 360,000 Australians, costing them up to $1 billion in lost retirement savings.
Industry Super Australia public affairs director Matt Linden stated that while progress is clearly being made, a tougher line of action is much needed.
“Every month that passes without a comprehensive solution to unpaid super, millions of Australians are being shortchanged on their retirement savings,” he said.
Mr Linden also took aim at the ATO, saying that the tax office had failed to address the problem despite having the data to identify individual taxpayers at risk of underpayment.
“There also seems to be inadequate emphasis being placed on the key measures really needed to tackle the problem,” said Mr Linden
“Amending the law to require employers to pay super more frequently – at least monthly but ideally at the same time as wages - is essential to stop super payments being used for business cash flow.
“Also essential is a policy decision from government to include small businesses in single touch payroll to enable real time tracking of payments, and collection of ordinary time earnings data to verify amounts paid are correct,” he added.
“Without taking these extra steps millions of Australians will continue to be shortchanged billions in super, with the government having to pick up the tab with higher age pension costs.”