From 1 October this year, SuperStream became mandatory for all SMSFs to roll over super to and from their funds. The new standards require a trustee to roll over or transfer an amount no later than three business days after the trustee receives the rollover or transfer request or if the trustee requires further information, the date the trustee receives that information.
Colonial First State head of technical services Craig Day said there are still some SMSF trustees who are either unaware of the new rules or are struggling to understand and comply with the specific payment requirements.
“For example, we are aware that some large funds are still being sent paper cheques and rollover benefit statements from SMSFs. Another common problem is that to avoid online banking daily transfer limits, trustees are going into their local bank branch and direct depositing the rollover amount into the large fund’s nominated bank account,” said Mr Day.
“Some trustees are also attempting to process the payment via the fund’s BPay facility – which is set up to accept contributions. Unfortunately, none of these payment methods comply with the SuperStream payment standards.”
Where an APRA-regulated fund receives amounts that don’t comply with the standards, Mr Day said this would cause system errors, which can make it difficult to match the rollover proceeds with the rollover message.
This can significantly slow down the processing of the rollover, he explained.
“To avoid these kinds of negative outcomes, a large fund could decide to reject all non-SupersStream compliant transfers and send the money back to the original account, which could result in additional delays and transaction costs and, in the case of a direct deposit processed through a branch, result in money being sent back to a branch’s holding account,” he said.
“[This] would then require the bank to identify and return the money to the trustee – triggering potentially further significant delays and trustee anxiety and frustration.”
Alternatively, to avoid these negative outcomes, the ATO has indicated in a SuperStream FAQ document that a large fund could decide to accept the transfer despite it not complying with the SuperStream standards if it is in the best interests of the member, Mr Day noted.
“However, it is important to understand that this would result in the SMSF breaching the SuperStream requirements and, therefore, the SIS Act, which could, in turn, lead to SMSF trustee administrative penalties,” he warned.
“In addition, the large fund may be unable to send a confirmation message back to the SMSF that the transfer was successfully completed, which could result in the fund needing additional evidence that the money was transferred to another complying fund as part of a legitimate rollover.”
Mr Day stressed the importance of SMSFs who plan to rollover benefits of engaging an electronic messaging provider, obtaining an ESA and processing the rollover payment in accordance with the SuperStream standards via an EFT.
That’s interesting, we have had many problems with non SMSF super funds who don’t seem to understand the new rules.
Maybe is the superstream system actually worked….the one time trying to initiate it from the SMSF side it would not work. Filled out all the information correctly, and when trying to confirm the payment had been made – says it was not. And now can’t go back and change it. How the hell are we meant to get this to work.
It would be good if the APRA funds made it easy for those of us trying to do the right thing. I’m trying to do a rollover into an APRA fund from an SMSF (we are initiating the rollover), but I can’t because the Bank Account details of the APRA fund are not available – they haven’t been given to our software provider, and APRA won’t give them to me, or my client, saying “you should be using the bPay details” – go figure.