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Employers Offered Amnesty To Pay Outstanding Superannuation

Employers offered amnesty to pay outstanding superannuation

The Federal government is proposing to pardon employers who have failed to pay superannuation over the past 25 years, in a bid to recover the more than $2.85 billion in contributions that are still owed to workers.

The 12-month amnesty would allow employers to pay back the superannuation they owe their employees without without having to pay the usual fine of 200 percent.

It would apply to unpaid superannuation contributions from July 1 1992 to March 31 2018, giving businesses a free pass if they pay back what they owe within a year.

Prime Minister Malcolm Turnbull told parliament the idea behind the legislation was to get more money for more workers.

“The legislation which is designed to recover over $200 million, hopefully more, of unpaid contributions, for the benefit of employees,” he said.

But the proposal has met with sharp criticism, with Labor promising to oppose the legislation, claiming it lets dodgy bosses “off the hook”.

“Only someone as out of touch as Malcolm Turnbull would reward dodgy businesses who have been robbing workers for 25 years,” Shadow Treasurer Chris Bowen said in a statement.

Financial Services Minister Kelly O’Dwyer defended the amnesty in Parliament.

“It is very clear that the government is not letting anybody off the hook from paying the superannuation guarantee entitlements that they ought to pay,” she said.

“Far from it.  This government has put in place a mechanism to allow small and medium-sized businesses, who otherwise have not paid superannuation guarantee entitlements, to come forward, under an amnesty, and make good every single dollar that they owe their workers.”

Miles Heffernan, Director of Litigation at Employer Advisors, said the idea of an amnesty could be an effective way of recovering money for workers.

“As long as businesses still have to pay interest on the super they have failed to pay, then maybe this is a good incentive for bosses to balance their books and get rid of an outstanding debt,” he said.

Currently, employers who don’t pay compulsory super contributions have to pay an additional 20 percent interest component.

They can also lose tax deductibility for the contributions, in addition to the fines of up to 200 percent of the unpaid money.

Mr Heffernan said superannuation contributions were not a discretionary business expense, and should always be paid.

“By withholding super, you are really robbing from your workers’ retirement, because the longer the money isn’t in their account, the more they miss out on the compound interest that money could be earning – and by the time they turn 67, we could be talking about tens of thousands of dollars,” he said.

For more information about unpaid superannuation, please click here.

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