The AAT has found that an employer did not make superannuation contributions when he made direct payments to an employee. The employee was his former de factor partner and, after the relationship ended in 2008, she complained to the ATO about the employer’s superannuation guarantee (SG) obligations.

After an initial audit, the ATO advised the employer that there would be “no further action” in relation to the quarters 1 January 2005 to 31 March 2008, unless new information became available. However, another audit was conducted in 2011, which resulted in SGC default assessments for the quarters ended 30 September 2004 to 31 March 2008. Overall, the Commissioner determined that the employer was liable to a SG charge of over $29,000 in respect of 7 employees, with around 65% of the liability related to his former partner.

The employer claimed that, in relation to his former partner, he fulfilled his SG obligations by including the contribution in her wages and paying her directly. Further, he argued that it was the employee’s responsibility, as trustee of her SMSF, to ensure the SG contributions were transferred into her fund’s bank account.

The AAT said this argument was without merit, as an employer is obliged to ensure that SG contributions are paid directly into the account of a complying superannuation fund. None of the evidence presented by the employer, including a “financial agreement” prepared by his lawyers that offered his former partner direct payments, could satisfy the Tribunal that he fulfilled his SG obligation.

In relation to the other 6 employees, the employer claimed that he paid the shortfall amount applicable to them, but provided no evidence to the AAT in support of this claim. Accordingly, the objection decisions under review were affirmed.

Finally, the AAT affirmed that it did not have the power to remit either the interest component or the administration component of the employer’s SG charge.

(Re Payne and FCT [2016] AATA 104, AAT, File Nos 2015/1427-31, Walsh SM, 25 February 2016.)

[LTN 39, 29/2/16]