The ATO has recently updated guidance for SMSF trustees and members who wish to transfer their super to or from another fund, as well as those who wish to release money for Division 293, CCAPS or FHSS purposes.
From 1 October 2021, SMSFs are required to transact in the Superannuation data and payment standard (the SuperStream standards) for rollovers. This means individuals will need to use SuperStream to process rollovers (other than in-specie rollovers) to or from the SMSF.
To minimise delays when rolling super to or from an SMSF, the ATO said that funds must ensure the SMSF details provided to the transferring fund match the details it holds.
SMSFs also need to ensure the member details, such as a surname, held by the transferring fund match those of the receiving fund. Sometimes these need to be updated with the transferring fund prior to requesting a rollover.
“When rolling super out of the SMSF, be aware your financial institution may have a daily limit on the amount that can be transferred which may impact the amount being rolled out,” the ATO said.
“You will need to confirm this with your financial institution before initiating the rollover and then determine if you need to increase the transfer limit with them, change the rollover amount to an amount below your limit and repeat as required along with changing to a different financial institution.”
The ATO noted that the transferring fund might request further information such as proof of identity (POI) documents and bank account details for fraud prevention reasons.
“If they do, they must request this information within five business days of receiving your request, and then complete that rollover within three business days of receiving the information,” the ATO explained.
“When transferring super from an APRA fund to an SMSF, contact your APRA fund to discuss your specific POI requirements and submit the documents in a timely manner.
“Use the Fund Validation Service to obtain the APRA fund’s current banking details.”
The ATO also warned that SMSFs should not submit multiple rollover requests when there is a delay.
SMSFs should make sure it is ready to roll over the amounts before submitting the request, such as confirming that the SMSF has sufficient liquid assets.
“Ensure the ESA of your SMSF provides rollover services, as not all ESAs can be used to process a rollover,” the ATO added.
“When rolling out of your SMSF, ensure the payment reference number (PRN) on the message and payment match and send the message and payment to the receiving fund at the same.
Tips on dealing with release authorities
A release authority (RA) is a document the ATO gives to a fund to authorise the release of their member’s super.
Upon receipt of an electronic RA, the ATO noted the SMSF must, within 10 business days from the date of release authority, electronically pay the ATO the lesser of the amount stated in the release authority, or the total amount of the super interest that could be paid at that time.
“The SMSF must then send the ATO a release authority statement (RAS) message via SuperStream advising the amount that was released and for partial releases, whether any super benefits remain in the account,” the ATO explained.
“Funds should also send the ATO a release authority error message (RAER) via SuperStream if the SMSF is unable to action the release authority.”
To effectively manage the RA process, the ATO said that the RAS must be returned via the same channel the RA was received.
“Send one response for each RA (either RAS or RAER),” the ATO explained. “Each RAS message must be accompanied by one payment – do not send a bulk payment for multiple RAS messages.”
“Funds need to make the payment to the SuperStream bank account and ensure the PRN of the payment matches the PRN advised within the RAS message.”
Question: If the SMSF is registered for SuperStream, has a valid ESA, a valid USI or ABN, appears correctly in SuperFundLookup, is vetted by FVS and submits a correctly formatted rollover request, then why does it need to supply ADDITIONAL POI documents to an APRA Fund?
Is this just them being precious and difficult because they can?
Can an SMSF request the same from an APRA Fund when roles are reversed?
And, who the heck thought up this garbage in the first place? I thought the government was supposed to be reducing red tape and streamlining processes like this. Not looking like it to me………
Feel your pain DavidL.
A lot of it comes back to an October 2010 letter from APRA which recommends APRA funds obtain a bank statement to confirm SMSF bank account details for EFT payment. The purpose of this is to ensure that funds are being paid to the SMSF direct, rather than a 3rd party illegal early release operator.
Also worth mentioning that in 2010, 99% of rollovers to SMSFs were done via cheque – so the guidance is outdated and the Regs around SuperStream require the SMSF bank account to be in the name of the SMSF anyway.
These requirements are being applied inconsistently and incorrectly by APRA regulated funds. For example some (once their member has been identified) don’t require any further confirmations, whereas others demand physical copies of a bank statement are certified and post to them before they will process it. These internal fund policies are intentional delay tactics because operationally those funds cannot process a rollover within the legislated timeframe.
All APRA funds have to publish a way to make complaints to them. Simply complain, wait for their templated complaint response email, then complain about it via AFCA.
If enough complaints are made, hopefully action will be taken. You can also send specific information to APRA themselves – they should pass it onto their compliance teams.
The ATO is not-unlike many large institutions where the IT team have become Gods in their own right. They dictate how things will be done because they have made themselves indispensable. Unfortunately commerciality and practicality are not part of the life experience of these programmers.
I am not laughing anymore. Dealing with the transfer of $850K for a pensioner last week left me gutted. It was not smooth. The client could not transfer, the bank had to. The client had extra fees to pay. The bank used the wrong TRN. The receiving fund then would not deal. They wanted certified copies of documents. This cost me about 6 additional hours. The poor client was overwhelmed. They had extra trips to the bank and extra visits to my office to provide documentation.
I thought the SVS was supposed to act as the gatekeeper to ensure the transaction was legitimate? Obviously the APRA funds have a different idea. Was there any consultation with them to see what they needed?
I am dreading the next one. And I am genuinely considering ceasing to offer SMSF services. Wearing my commercial hat – these services are being provided at a loss to my business.
First ASIC and the limited license schmozzle; now ATO with superstream.
Can someone in the government please design something that works seamlessly?
So even tge tax office agrees that transferring rollover funds in 3 days is impossible unless you trick the system. Make sure you don’t request the rollover until you’ve liquidated sufficient assets and worked out your bank transfer limits OR changed banks to one that has a higher limit. Is the ATO really serious about all this? Is Sen. Hume so unapproachable that she can’t accept advice? She still hasn’t answered my emails. The problem remains that if a relationship turns sour, there may not be cooperation in the timing of asset liquidation and rollover request.
A prominent Qld APRA fund currently won’t accept an SMSF rollover as they say EFT’s are not permitted and that SMSFs have to register for the the Bulk Electronic Clearing System Direct Entry System (BECS DE) maintained by the Australian Payment Clearing Association??
That’s not what the 3 major SMSF software providers are telling their clients. The instruction is to do a direct bank to bank transfer, quoting the SuperStream payment reference number (PRN). It seems from this article, the ATO is saying that EFTs are acceptable also?
Has anyone else come up against this or their trustee clients can’t rollout, even though the SuperStream messages all work?