The Government's SuperStream initiative takes effect from 1 July 2014 and will mandate the way employers pay their employee's superannuation contributions.
Under SuperStream, employers will be required to make super contributions on behalf of their employees by submitting data and payments electronically in a single transaction.
The main benefit for employers will be a single channel for remitting Superannuation Guarantee (SG) contributions to multiple super funds that have arisen since the introduction of "Choice of Fund" for employees.
For employees, it will mean faster processing of contributions and roll-overs and reduce the number of lost super accounts and unclaimed monies by using the Tax File Number system.
When does an employer have to start using the standard?
If on 1 July 2014 you have:
- 20 or more employees* (medium or large employer) – you must start using the standard from 1 July 2014
- 19 or fewer employees* (small employer) – you must start using the standard from 1 July 2015.
*includes both full-time & part-time or casual employees on your payroll at 1 July 2014
By 1 July 2015, all employers will be required to use SuperStream.
How does an employer use SuperStream?
Your payroll and accounting software may already support the SuperStream functionality.
By 31 May 2014 each superannuation fund you contribute to for employees will be required to supply you with an Electronic Service Address (ESA), Australian Business Number (ABN) and bank account details of their fund to add to your payroll software.
A Fund Validation Service (FVS) is a free web service being developed by the ATO that will be available to employers from 1 July 2014. This service will allow an employer to look-up or validate e-commerce details of a super fund chosen by an employee.
For small businesses (less than 20 employees) without sophisticated payroll systems, the ATO will provide a Small Business Superannuation Clearing House to receive and distribute contributions.
Can I continue to pay by cheque?
No. If a medium to large employer continues to send contributions by cheque after 1 July 2014, they will not be compliant with the standard and may face penalties. The ATO who will be responsible for monitoring compliance with the new rules by employers, have however stated they will work with employers during the first 12 months before strict enforcement begins.
More information for employers
You can read more about your SuperStream obligations on the ATO Website here:
SMSF's & the SuperStream
Self Managed Superannuation Funds will not generally be exempt from the SuperStream changes.
Contributions to an SMSF
If you are a trustee/member of an SMSF and your contributing employer is a medium to large employer, you will need to :
- Register your SMSF for an Electronic Service Address (ESA),
- Provide your SMSF's ESA, ABN and bank account details to your employer no later than 31 May 2014.
Exemption for related party employers
There will be an exemption for SMSF's where:
- the SMSF member(s) are related to the contributing employer e.g. if you are a salaried employee or director of your own business; or
- You are self employed or only make personal tax deductible contributions to your SMSF
SMSFs & rollovers
From 1 January 2015, it is expected that SMSFs will need to be registered with SuperStream in order to receive any rollover from a large superannuation fund.
How does an SMSF register?
Hanrick Curran can register your SMSF for an Electronic Service Address (ESA) and provide you with the information to supply to your employer by the due date.
Alternatively, you can choose to register your SMSF yourself with an ATO approved ESA service provider and provide the information directly to your employer.
If the employer contributing to your SMSF is likely to have 20 or more employees as at 1 July 2014, please contact us as soon as possible to discuss SuperStream registration.
More information for SMSF trustees
The ATO is currently writing to trustees of SMSFs to inform them of their SuperStream obligations.