The government has released draft regulations to amend Superannuation Industry (Supervision) Regulations 1994 in order to extend the operation of SuperStream to cover SMSFs.
In a public announcement, Minister for Revenue and Financial Services Kelly O’Dwyer said draft regulations will make it easier for SMSF trustees to roll existing superannuation funds into an SMSF.
“To date, only rollovers between two APRA funds can be transferred electronically using SuperStream. This reform will now allow SMSF members to initiate and receive rollovers electronically between an APRA fund and their SMSF,” said Ms O’Dwyer.
SuperConcepts executive manager of SMSF technical and private wealth Graeme Colley said linking SMSFs to APRA-based funds under the SuperStream arrangements is a positive step overall that will remove the frustration of rolling benefits between SMSFs and APRA funds.
“It will provide greater certainty that the long time it currently takes to roll over benefits from an APRA fund to an SMSF will be reduced to hopefully three days,” said Mr Colley.
“Also, it should be more efficient as it should require the information included on the ATO’s rollover form rather than those cases where the transferring fund requires additional information that slows down the process.”
In addition, Mr Colley said rollovers from an SMSF to an APRA fund will remove the requirement to draw a cheque which is then paid to the APRA fund.
“Auditors will be much happier with the new system as the direct transfers between funds will give greater confidence that the amount being transferred is actually going to the correct fund rather than ending up somewhere else,” he said.
Mr Colley warned that notifying the ATO of the of the unique superannuation identifier (USI), bank details and internet protocol address could be a challenge for the industry, however, as the new rules not only apply to the rollover of benefits between funds but to any fund that receives a contribution.
“The requirement that it appl[ies] to funds which receive contributions is considered to be a bit of overkill as many SMSFs receive the contributions directly from members and other parties for whom there is no real need to use the SuperStream arrangements,” he said.
“Many of those that make contributions to the fund will only ever have an SMSF without any rollovers and similar transactions.”
The standardising of the rollover of benefits between all funds, large and small, he said, should “increase the flow of funds, provide greater efficiencies and certainty as well as be an integrity measure to ensure the benefit ends up where it should”.
“[However], some funds may still need to register even though there is a high probability that no rollover will occur and they will just receive contributions directly from the members,” he noted.
Treasury is currently seeking feedback on the draft regulations. Interested parties can submit responses to this consultation up until 3 August 2018.
Opt in for SMSF participation?
Some SMSF receive both arms length employer contributions and member generated contributions.
However most don’t so selective choice makes a lot more sense than compulsory.