Key points
- The new SuperStream Data and Payment Standards for employer superannuation contributions have been in operation since July, the testing period finished in November and ATO expects all SMSFs to be compliant by the end of the year.
- SMSFs with only related contributions and those in retirement phase are not required to comply.
- SMSFs need to have an electronic service address to comply.
The new SuperStream Data and Payment Standards for employer superannuation contributions have technically been in operation since 1 July 2014. However, only after the ATO’s testing period ended on 2 November 2014 are affected employers and superannuation funds expected to comply with the new requirements. The Government has put in place an allowance for complying with the new rules, however, the employer or superannuation fund must show that they are making a genuine effort to comply.
What is SuperStream for employer superannuation contributions?
SuperStream is a government reform aimed at improving the efficiency of the superannuation system. New data standards, which are part of the SuperStream reform, require superannuation funds to accept employer contributions and other information from employers electronically. These new data standards apply to ALL superannuation funds, including SMSFs (with some exceptions).
SMSFs compliance with SuperStream
Superstream is being rolled out on a staggered basis for employers. Medium to large employers (20 employees or more) are expected to comply from 1 July 2014, while small employers (fewer than 20 employees on 1 July 14) have until 1 July 2015.
SMSFs are expected to be able to receive contribution messages in the format per the standard (electronic message and contributions) from 3 November 2014. SMSFs, other than those exempt (see below), are not permitted to receive contribution messages in an alternate format.
Exception – SMSFs with only related employer contributions not required to comply
Where the only employer contributions received by an SMSF are from a related employer, the SMSF is not required to meet the requirements of SuperStream. A related employer is one where the members of the SMSF control the employer, for example, mum and dad are members of the SMSF and operate their own business, which they own.
Further, where the SMSF is not expected to receive any employer contributions, for example, the members are retired and in receipt of pensions, the fund is not required to have a SuperStream solution.
SMSFs that only receive employer contributions from a small employer, will not likely receive contributions per the SuperStream standard until after 1 July 2015. However, they are still required to be SuperStream ready from 3 November 2014.
Action for SMSFs
For most SMSFs the effort required to comply with SuperStream is relatively minimal. The hardest choice they have is the selection of an SMSF message service provider. They can start by contacting the accountant or administrator who attends to the administration and compliance of their fund to see if they have a preferred SMSF message service provider. Accountants and more particularly administrators, may be using an SMSF administration software platform that can receive SuperStream compliance messages and process the contribution and related data.
For those who do not use an accountant or administrator, or the software used does not handle SuperStream, there are SMSF message service providers who can provide a solution. Whilst these solutions may not fully integrate, the solution will ensure that the SMSF complies with the law and will also be a form of substantiation of contribution details at the time of the annual audit.
The SMSF message provider will supply an Electronic Service Address (‘ESA’) that the members of the SMSF must provide to their employer, together with the fund’s ABN and bank account details. Employers should already have the fund’s ABN and in most cases will have the bank details. Consequently, it is not a difficult task for an SMSF to be SuperStream compliant.
The ATO provides a list of SMSF message service providers on their website. Just search “SMSF message service providers” on their website. Please note that simply picking an ESA and supplying it to the employer may not be enough to ensure that the SuperStream message is received for the SMSF.
Most SMSF message service providers require the fund to “register” with them, so that their system has an expectation of a message and can store it for the fund (based on their ABN).
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.
