A new law combating employer non-compliance with the Superannuation Guarantee (SG) scheme means greater potential personal liability, including criminal charges, for Australian company directors.
Effective 1 April 2019, the Treasury Laws Amendment (2018 Measures No. 4) Bill 2018 introduced important changes to the Director Penalty Notice (DPN) regime.
Prior to 1 April 2019 changes
Until the introduction of these changes, a company had three months after each SG due date to report super obligations outstanding at the respective date. If a DPN was issued, a director could avoid personal liability for unpaid super by either paying the debt, appointing a voluntary administrator, or putting the company into liquidation, within 21 days.
No more three-month reporting window
The new law abolishes the three-month rule for superannuation. A company must now report any SG debt by the SG reporting due date for each quarter.
If a company fails to pay super and also fails to report its debt by the due date, the company directors are now automatically personally liable. The new law gives the ATO the power to estimate the SG debt, and to issue a DPN irrespective of whether the company is insolvent. Liquidation or insolvency will no longer cancel the liability.
What should company directors do to protect themselves?
The most important thing to do is to familiarise yourself with the new reporting obligations and ensure that processes are in place to pay and report SG contributions on time. If the company fails to pay superannuation to any or all of its employees you will need to lodge an SG statement.
Lodgement dates are now as follows:
| Quarter | Period | Super payment due | SG statement due |
| 1 | 1 July – 30 September | 28 October | 28 November |
| 2 | 1 October – 31 December | 28 January | 28 February |
| 3 | 1 January – 31 March | 28 April | 28 May |
| 4 | 1 April – 30 June | 28 July | 28 August |
Second, if your company has more than two directors, you are at risk of the potential liability arising from the actions of a rogue director. The ATO may seek to recover unpaid superannuation from you as a director due to another director’s behaviour. As a result, it is extremely important to review the current protections around your personal assets – property and inherited wealth.
While the majority of companies meet their SG payment and reporting obligations, the number of non-compliant employers are predominantly small and medium-sized businesses.
Directors should also be aware that the ‘single-touch payroll’ for electronic wage and superannuation payments will further increase visibility of their SG compliance. Because of this reform, the ATO will be able to enforce non-compliance much faster than it can now.
Know your liability and stay protected. Contact us to find out more.
DISCLAIMER: This article is intended to provide general information and should not be relied upon as legal advice. Formal legal advice should be sought if you are concerned about, or require particular advice applicable to your specific circumstances in relation to, any topics covered in this article.