From 1 October 2021, SuperStream will become mandatory for all self-managed super funds to rollover super to or from their funds.
With less than 60 days left until the implementation of the compulsory SuperStream, now is the perfect time to ensure your SMSF is well-prepared to make the change.
What is SuperStream?
SuperStream is a data-transfer method businesses use to pay super guarantee (SG) contributions to an employee’s super fund. Introduced in 2014, it digitalised the process in which super funds collected SG Contributions from employers.
Since its induction, many employers have adopted SuperStream to make payments to SMSF’s and APRA-regulated funds. Some benefit employers have enjoyed with the introduction of SuperStream includes the ability to make contributions in a single transaction if multiple super funds are involved, and the increased processing and efficiency of SG contribution payments.
Before SuperStream, employers often made manual contributions to an employee’s super fund via a cheque in the mail or a manual form lodgement, which often left many super funds scrambling to match the contributions to a specific member as they lacked the identification information required. SuperStream has reduced the prevalence of lost accounts and unclaimed money ten-fold, as the data is linked to a unique payment reference number.
Why SuperStream?
SuperStream will allow for rollovers & contributions to be processed faster and with more efficiency whilst simultaneously reducing errors.
Additionally, it is a safe channel for transferring contribution & rollover information as all SuperStream communications are encrypted.
Setting-up SuperStream?
To utilise SuperStream, you must ensure you have the following details:
- Electronic Service Address (ESA)
An ESA is an alias used by an SMSF that acts as a digital inbox to receive messages related to SuperStream. These will predominantly include Contribution Remittance advice from an employer once a transfer into a super fund occurs. An ESA is most easily obtainable through an SMSF Intermediary, such as a specialist SMSF accounting software. Alternatively, SMSF members can apply for an ESA through an SMSF Messaging provider.
- Australian Business Number (ABN)
- Ensure your SMSF details are up to date with the ATO (specifically, confirming your current SMSF bank account is correct).
Delays in the process may occur if a transferring fund finds a discrepancy between the details held by the ATO and an SMSF’s bank details. It is pivotal that all this information is up to date. The ATO recently announced they had recently issued a warning to 3,300 SMSF’s as they did not have a bank account confirmed.
If you are unsure where to obtain any of the above information, your current tax agent, SMSF Administrator, or current service provider will likely have this on file.
Who Does SuperStream Affect?
The changes will affect all SMSFs who wish to roll over money to and from their fund as it will become compulsory.
Time Frames?
Once a written request to rollover funds from an SMSF through SuperStream is received by the recipient Super provider, trustees have three business days to confirm that the details are correct.
Consequences
If the trustees have failed to implement SuperStream before October 1, the SMSF will not be able to process rollovers to and from the fund.
Furthermore, the ATO can penalise funds that are not compliant with the new SuperStream requirements by way of a direction notice or financial penalty.
3 Tips to Be SuperStream Ready
- Contact your current SMSF provider, Tax Agent, or Accountant to ensure your SMSF is ready
- Have all the required information prepared well before 1 October 2021, to avoid unforeseen issues that may arise
- Ensure your correct bank account is registered with the ATO to avoid delays
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If you are employed by your family business and your super guarantee contributions go to your SMSF, these related-party employer contributions are exempt from the SuperStream standard.[b]