In a recent update, Heffron head of education and technical services Lyn Formica said she had recently attended a meeting between the ATO and a number of industry professionals to discuss experiences following the 1 October 2021 extension of SuperStream to rollovers in or out of SMSFs.
“One of the common themes was that members of SMSFs needed more education around the steps they need to take before requesting the rollover of super benefits in or out of their SMSF,” she said.
Ms Formica noted that the ATO is in the process of preparing further website material to educate members and trustees.
She stressed that there were key areas in which SMSFs mostly had run into issues such as the use of the electronic service address.
“Any SMSF intending to receive a rollover into the fund or roll benefits out of the fund needs an active electronic service address (ESA),” she said.
“To avoid unnecessary delays in the rollover process, impacted SMSFs should ensure they have a rollover compliant ESA as soon as the SMSF is established, when new members join an existing SMSF, or as soon as a decision is made to windup or roll benefits out of the SMSF.
“For new SMSFs, details of the fund’s ESA should be provided to the ATO at the same time as applying for the fund’s ABN. Where an existing SMSF has changed software providers or administrators, they may need to update the SMSF’s ESA details with the ATO.”
When an individual requests a rollover of their super benefits into an SMSF, Ms Formica also noted that a number of validity checks must be undertaken by the transferring fund (or the ATO if the rollover was requested via myGov) to ensure the rollover is not part of an illegal early access scheme and that the member’s identity has not been compromised.
“One of these checks is ensuring that the receiving SMSF’s bank account details, as shown on the rollover request, match those held by the ATO for the purpose of receiving superannuation contributions and rollovers,” she noted.
“In many instances over the last two months, these validation checks reported an error because the fund’s bank account details held with the ATO were either missing or out of date.
“In the case of new SMSFs, you may need to instigate a process change in your business. Historically, many accountants/administrators didn’t provide details of the fund’s bank account to the ATO until lodgement of the fund’s first SMSF Annual Return. Since the introduction of SuperStream for rollovers, bank account details need to be provided to the ATO before the rollover is requested.”
SMSFs should also make sure to watch for restrictions on SMSF bank account, according to Ms Formica. Where benefits are being rolled out of an SMSF, the transfer of monies to the receiving fund needs to be made electronically. This is usually via an electronic funds transfer or BPAY transaction.
“We’ve seen many instances where rollovers were delayed because the SMSF bank account wasn’t setup for electronic banking, there was a daily limit on the SMSF bank account and the rollover amount exceeded that limit, or the SMSF bank account allowed BPAY transactions but the receiving fund couldn’t receive rollovers that way,” Ms Formica explained.
“Unfortunately, these sorts of constraints are simply something SMSF trustees need to get used to and plan for. As soon as a member indicates they may be considering rolling benefits out of the fund, the trustee should engage with their bank and investigate their options.
“Over the last few months, there have also been problems with processing the final rollover out of wound up SMSFs, issues with release authorities, complying with the three business day rule, and many more.
“We are continuing our work with the ATO to develop solutions to these problems.”
