Consequences of noncompliance by employees

Consequences of noncompliance by employees
Employees must not use a self managed superannuation fund or other scheme to obtain illegal early access to their superannuation. They should be aware that significant penalties could apply for illegally accessing their superannuation benefits early.

The Tax Office may:

assess individuals who have participated in early access schemes – the withdrawn benefits will be taxed at the individual’s marginal rate and penalties will be imposed where applicable, and
disqualify and/or refer for prosecution action individuals who set up funds for illegal early access.

The first year of choice of superannuation fund
Before 29 July 2005, employers will need to have offered existing eligible employees a choice of superannuation fund. Where an employee makes a choice of superannuation fund, the employer must act on that choice within two months.

From October 2005 onwards, the Tax Office will start a range of activities to assure compliance with choice of superannuation fund obligations. However, it will continue to support employers who make a genuine effort to comply.

Some of the compliance activities to be undertaken include:

following up on all complaints received from employees about an employer not meeting their superannuation guarantee or choice of superannuation fund obligations. This may involve a desk audit, telephone verification check, field audit and/or contacting third parties, such as superannuation funds, to confirm information provided by employers
using routine tax compliance verification visits to employers to check that superannuation guarantee and choice of superannuation fund obligations are being met
contacting employers who have previously experienced problems in meeting their obligations to ensure they meet their superannuation guarantee and choice of superannuation fund obligations. The Tax Office may also contact third parties, such as superannuation funds, to verify information provided by employers
conducting industry-based audits to assess compliance levels with superannuation guarantee and choice of superannuation fund obligations. These audits will target industries considered to be at higher risk of non-compliance due to factors such as non-standard employment arrangements; links to the cash economy; or a high incidence of employee complaints
monitoring new self managed superannuation fund registrations to ensure that these are not used by individuals to inappropriately access their superannuation contributions early. Trustees of self managed superannuation funds may be subject to desk audits, telephone verification checks or field audits, and
providing choice of superannuation fund information to new employers.
During this period, the Tax Office will continue to enforce the existing superannuation guarantee obligations and apply normal penalty policies in cases of non-compliance with these obligations.

After the first year of choice of superannuation fund
It is expected that the choice of superannuation fund initiative will be effectively implemented by July 2006. Existing employers will be expected to have developed an understanding of their obligations and to have put in place the necessary infrastructure and procedures to enable them to comply.

The Tax Office will continue with its program of verification activities and refine its approaches based on its experience during the initiative’s first year of operation. It will also adjust its penalty reduction policy to reflect a maturing system. From the quarter starting 1 July 2006, non-compliance will be penalised in line with normal penalty guidelines.

Employees
The Tax Office will focus on preventing improper early access by employees to preserved superannuation benefits.

The Tax Office may refer for prosecution employees who provide false or misleading statements, for example if an employee provides their personal bank account details to an employer instead of their chosen superannuation fund’s bank account details.

It will also work with ASIC and APRA to help employees understand their entitlements under choice of superannuation fund.

How the Tax Office and ASIC will help employees understand their entitlements under choice of superannuation fund
Information is being provided through the Super Choice website at www.superchoice.gov.au

A Super Choice Infoline has been set up to answer questions – call 13 28 64.

A free publication, Super Choices, has been released to provide employees with information about superannuation, choice of superannuation fund and how to compare funds. It is available from the Super Choice website or by calling the Super Choice Infoline.

An education campaign is being undertaken to ensure that employees can find out if they are eligible for choice of superannuation fund.

In addition, seminars will be conducted through employer groups and industry bodies to explain what employees have to do if they wish to choose a fund and what employees should consider when making a choice.


Advice about self managed superannuation funds

There has been significant growth in the number of self managed superannuation funds established over the last few years. ASIC is concerned that consumers get appropriate advice about the relative costs and benefits of establishing a self managed superannuation fund, that they are aware of the time and skills required of a trustee, and that they have sufficient funds to justify the establishment and ongoing costs of a self managed superannuation fund.

ASIC is particularly interested in the conduct of accountants in relation to self managed superannuation funds. If they are not licensed to give financial advice, accountants are able to give only limited advice about the establishment and structure of a self managed superannuation fund.

More information
The Tax Office, ASIC, APRA and the Superannuation Complaints Tribunal have different responsibilities for choice of superannuation fund. This section is designed to help you identify which organisation can help with your enquiry.

A good starting point for employees, employers and professional advisers to get general information is the Super Choice website and Infoline:

visit www.superchoice.gov.au, or
phone 13 28 64.
The Tax Office
For more information on superannuation, employers can:

search this website, or
phone the Tax Office’s superannuation information line on 13 10 20.
For more information on self managed superannuation funds:

refer to the booklet DIY super – it’s your money... but not yet!
phone 13 10 20
If you want to provide information about tax evasion or early access to superannuation schemes

The Tax Office website has a link for reporting tax evasion and avoidance. It explains what tax evasion is and provides details about other questions you might have.

You can anonymously report information about tax evasion to the Tax Office by:

phoning 1800 060 062
faxing 1800 804 544
visiting www.ato.gov.au, or
writing to
Australian Taxation Office
Tax Evasion Referral Centre
Locked Bag 6050
Dandenong VIC 3175

Information provided by the community is a valuable part of the Tax Office’s compliance program and is used with other intelligence in investigations.

ASIC
ASIC publishes extensive guidance for the financial services industry about how to comply with their legal obligations. This information is contained in policy statements, information releases, subject guides and fact sheets at www.asic.gov.au

Anyone can use the free searching facility on ASIC’s website www.asic.gov.au to check if a business holds an Australian financial services licence or is an authorised representative of an Australian financial services licensee.

ASIC’s consumer website www.fido.gov.au offers financial tips and safety checks on superannuation, financial advice, money matters and warnings about scams.

ASIC also investigates complaints about fraud, dishonesty, and misleading, deceptive and unconscionable conduct in superannuation and financial services. To make a complaint, phone 1300 300 630.

APRA
To find more information on the prudential requirements applying to superannuation funds, you can:

visit APRA’s website www.apra.gov.au
email APRA’s Contact Centre at APRAinfo@apra.gov.au, or
phone 1300 13 10 60.
Superannuation Complaints Tribunal
The Superannuation Complaints Tribunal is an independent tribunal that deals with complaints about superannuation funds, annuities and deferred annuities. It does this through conciliation to resolve the complaint and, in some cases, through a formal review of the decision/s or conduct to which the complaint relates.

The Tribunal is required to be fair, economical, informal and quick. There is no fee charged for lodging a complaint with the Tribunal, and none of the Tribunal’s costs are charged to the complainant.

The Tribunal does not have jurisdiction to deal with complaints about the decisions or conduct of an employer.

For more information you can:

visit the Tribunal’s website at www.sct.gov.au
call 1300 780 808, or
write to
The Superannuation Complaints Tribunal
Locked Bag 3060
GPO Melbourne VIC 3001