The Superannuation Guarantee (SG) system was introduced in 1992 as a means of funding the retirement of individuals. The SG system prescribes a level of superannuation support to be provided by employers to employees. Total superannuation assets in Australia as at 30 June 2021 were $3.3 trillion. Employer SG contributions in 2020–21 were $74.1 billion.
The SG system operates largely without regulatory intervention. The Australian Taxation Office (ATO) has reported a high rate of voluntary compliance with SG. In respect of superannuation, the ATO’s role is to encourage voluntary compliance and enforce the penalties of non‐compliance.
Employer non-compliance with SG obligations has an impact on the retirement incomes of Australians, and has been subject to two major reviews in recent years. This topic was identified as a parliamentary priority in 2019–20. The audit provides assurance about the effectiveness of ATO activities aimed at fostering participation in the superannuation system.
- The ATO’s activities in addressing Superannuation Guarantee non-compliance are partly effective.
- The ATO’s risk-based SG compliance framework is partly effective. Although SG risks are assessed and treated, the risk rating for unpaid SG is lower than the ATO risk framework would indicate if consideration of risk to revenue was applied. Although there is a compliance strategy to shift to a more preventative approach, it is not yet supported by effective data analysis.
- The ATO’s compliance activities are partly effective in achieving greater employer compliance with SG obligations. The extent of improvement in employer compliance is difficult to establish due to a lack of performance information. Although there has been an increase in the absolute amount of debt raised and funds collected, the ATO has acknowledged that it has a small influence on the net SG gap. Planned targeted reforms to improve the integrity and administration of the SG system were partly implemented. Although the ATO did not fully employ its SG debt-recovery powers during 2020, in line with its suspension of other ATO-initiated compliance work during the COVID-19 pandemic, SG debt increased at a higher rate than total ATO debt in 2020–21.