The Federal Government has confirmed it will move next year to make the penalties imposed on employers for the late or short payment of the superannuation guarantee more reflective of the level of their breach.
The undertaking has been given by the Assistant Treasurer, Josh Frydenberg in context of a Board of Taxation report which described the current penalty regime faced by employers as being "unnecessarily harsh".
Frydenberg said that the Government intended the changes would take effect from 1 July next year.
The Board of Taxation report said that it considered the "operation of the SG Charge regime is unnecessarily harsh, often with disproportionate outcomes, and very limited discretion by the
[Tax] Commissioner to take into account factors surrounding a late payment".
The report said that despite the original intention of the SG Charge regime, the Board was aware of a number of examples where the application of the law had given rise to "disproportionate interest and administration elements".
It suggested that one possible solution might be to retain the current SG Charge regime but provide a broad discretionary power for the Commissioner to remit SG Charge components.
However the report noted that such a move would require the Commissioner to have a basis on which to remit the components and that such discretions would, in turn, give rise to review or objection rights "which can further complicate and extend the process for employers".
"It is considered to be more efficient for the law to produce the desired outcome in the first instance, rather than the Commissioner exercising discretion," it said.
While the Financial Advice Association Australia said it supports a performance testing regime “in principle”, it holds reservations about expanding this scope to retirement products.
In a Senate submission, the Financial Services Council said super funds should be able to nudge members on engaging with their super and has cautioned against default placements.
The Joint Associations Working Group, which counts FSC in its ranks, has issued an urgent warning to the government.
Senator Jane Hume will join the speaker lineup at the inaugural Australian Wealth Management Summit.
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