AI vs. the ‘snowball effect’: Navigating Superannuation compliance
- Written by Business Daily Media
Over the past decade, Australia's workplace environment has undergone significant improvements, particularly in safety, with a strong focus on protecting employees. However, while advancements in workplace safety have progressed, compensation practices have not kept pace, resulting in increasingly complex payroll compliance challenges.
Yellow Canary, a leader in workforce compliance solutions, has been actively involved in addressing these challenges, having reviewed over $70 billion in wage and entitlement spending across more than 100 wage review projects for some of Australia’s largest employers.
This experience has revealed a growing trend—a snowball effect in payroll compliance. High-profile underpayment cases have not only shed light on the difficulties of navigating modern awards and enterprise agreements but have also underscored the intricate challenges of managing long service leave and, more recently, superannuation compliance.
Superannuation compliance presents one of the most significant challenges, with accurate calculation of the Superannuation Guarantee (SG) being a key concern. This includes ensuring correct pay codes, contractor classifications, and the application of unique payroll scenarios. The complexity is further amplified by the need to apply appropriate superannuation rates across different employee classifications and ensure that all eligible employees are correctly covered.
Mistakes in these calculations can lead to significant liabilities, such as shortfalls, interest penalties, and administration fees. If Superannuation Guarantee Charge (SGC) liabilities are incorrect, these can reflect wrong in balance sheets. Furthermore, penalties for delayed superannuation payments can apply, and if these late payments are not promptly addressed, the liabilities can increase over time.
As the legal landscape evolves and regulatory scrutiny intensifies, superannuation compliance has become a critical focus for employers. Beyond financial penalties from the ATO, non-compliance can lead to reputational damage, eroding employee trust and harming a company’s market standing. These challenges necessitate a more sophisticated approach to managing superannuation compliance—one that transcends traditional methods and harnesses the power of automation and AI-driven tools.
“Superannuation compliance is not just a matter of ticking boxes. It requires meticulous attention to detail and a strategic approach to manage the complexities involved,” said Marcus Zeltzer, Founder & Managing Director of Yellow Canary.
“The complexities involved in superannuation guarantee calculations and the associated liabilities are often underestimated, leading to significant risks for employers. It’s essential for employers to consider new ways to not only remain compliant but also manage their obligations efficiently.”
The introduction of AI-powered and automation tools can provide a much-needed solution to these challenges. By automating SG calculations and providing real-time insights into compliance status, these tools can help employers reduce the risk of errors, and support that their superannuation obligations are met accurately and on time. Moreover, if late payments are detected, the calculation of SGC liabilities can also be automated.
“At Yellow Canary, we’ve witnessed firsthand the transformative impact that automation and AI can have on payroll compliance,” Zeltzer adds. “The introduction of AI and machine learning technologies is a game-changer, offering solutions that go beyond traditional compliance management. In an environment where the stakes are increasingly high, it’s crucial for employers to embrace these technologies as part of their compliance strategy.”
AI and automation also offer predictive analysis, automate complex reporting tasks, and integrate data from multiple sources. It can also give insight to underlying issues for superannuation underpayments. This synergy enables businesses to identify anomalies more accurately, greatly reducing manual errors and improving decision-making processes.
With the recent introduction of Yellow Canary’s new AI-powered Superannuation Compliance tool, businesses now have a robust resource to address both current and emerging superannuation compliance issues.
“Businesses can't afford to be reactive anymore,” added Zeltzer. “AI and automation are not just a luxury; it’s becoming a necessity to maintain compliance and protect against the increasing scrutiny and complexity of superannuation non-compliance.”
By adopting a proactive approach and utilising advanced tools, employers can navigate this complex landscape with confidence, and ensure employees receive the savings they need for their futures.
About Yellow Canary
Yellow Canary is challenging the traditional approach to workforce compliance with its leading automation solutions. Their automated platform enables our clients to proactively manage their workforce compliance obligations across employee payments, entitlements, superannuation, and long service leave.
Their solutions help employers to navigate the complexities of the industrial relations environment in Australia and provide both historical and ongoing compliance reporting options.
Learn more about Yellow Canary’s AI-powered Superannuation Compliance tool here: https://www.yellowcanary.com.au/solutions/superannuation-compliance