ATO doubles director penalty notices for unpaid super as patience wears thin
In a new transparency report, the ATO said it issued 8,710 DPNs related to unpaid SGC in 2023-2024, with 6,500 companies involved.
The Australian Taxation Office (ATO) more than doubled the number of director penalty notices related to unpaid super guarantee charges over the last financial year, demonstrating a firm approach to compliance and waning patience for employers doing the wrong thing.
Super guarantee charges (SGC) apply when employers don’t pay the correct amount into their employees’ super funds when those quarterly payments are due.
To discourage employers from simply paying super guarantee when they feel like it, the SGC applies a nominal 10% interest rate to unpaid amounts.
Company directors are personally liable for SGC.
If they do not step forward to pay it, the tax office can recover those penalties by issuing a director penalty notice (DPN).
Once a DPN ‘locks’ onto a company director, the ATO can retrieve those funds through garnishee notices, offsetting tax credits against amounts owed, and by pursuing legal action against the director.
In a new transparency report, the ATO said it issued 8,710 DPNs related to unpaid SGC in 2023-2024, with 6,500 companies involved.
By comparison, it issued 3,660 DPNs linked to 2,650 companies in 2022-2023.
The results speak to the ATO’s tightening compliance regime, a turnaround from the height of the COVID-19 pandemic when it showed more leniency to late payers.
The tax office tallied $2.25 billion in collectable SGC debt in 2023-2024, with just $209 million of total SGC debt, or 9.7%, subject to a payment plan.
“We’re committed to taking a firm approach on the non-payment” of super guarantee, the ATO said in a statement accompanying the data.
Most employers doing the right thing
While DPNs related to unpaid super guarantee are on the rise, the data does show Australian employers are broadly compliant.
Employers are paying 92.4% of the super guarantee they are required to pay, without the ATO stepping in.
And not every instance of unpaid SGC necessitated a DPN.
The ATO said $240 million in SGC was raised as the result of 100,000 reminders and 67,000 prompts, informing directors of their obligations before issuing a DPN.
Some employers even came forward themselves.
These voluntary disclosures of unpaid super led to $539 million in SGC liabilities being raised, resulting in $352 million in super being recovered and paid into individuals’ super funds.
You can view the ATO’s latest figures here.
Focus on repayments in ATO and government
The super payment figures arrive hot on the heels of another ATO transparency report, which showed small businesses specifically owe 87 cents for every dollar they theoretically owe in tax.
Looking ahead, structural tweaks promise to change how the ATO cracks down on those who underpay super.
The arrival of payday superannuation in 2026 could make it harder for employers to miss super payment deadlines, lowering the incidence of SGC.
But Treasurer Jim Chalmers has proposed a plan to beef up the SGC, tweaking the interest rate and charging it daily for super amounts that go unpaid seven days after payday.
Never miss a story: sign up to SmartCompany’s free daily newsletter and find our best stories on LinkedIn.
Comments