SuperStream compliance issues could ‘blow up’ in 2022

“It’s an obligation for auditors from a compliance point of view to ensure that these requirements have been met,” Mr Dunn flagged.

“So, this is potentially where we will see this blow up, where you will find auditors saying that trustees have not complied with the requirements around the rollover into or out of those particular funds.

“It is naturally capturing excess for a whole range of relief authorities as well, who will be asking more questions around this because they have now all moved into SuperStream. Therefore, non-compliance in this area will trigger the auditor contravention report to the ATO. What action the ATO takes from there will be interesting.”

Mr Dunn’s comments have preceded the SMSF Adviser Technical Strategy Day 2022 in October, where he will moderate a panel session on the latest version of SuperStream and the lingering issues that continue to cause delays.

Mr Dunn and the panel will outline the key issues arising with rollovers to and from Australian Prudential Regulation Authority (APRA)-regulated funds, and how auditors are approaching SuperStream rollovers in their audits, as well as what the ATO’s current stance is.

Questions remain on ATO’s approach

Noting that a full financial year has not passed since the rollout of the new SuperStream requirements, Mr Dunn said questions remain around how the ATO will view non-compliance, and whether it will issue potential administrative penalties immediately.

“Alternatively, instead of issuing penalties right away, will the ATO say the trustees have made best endeavours to comply here and write to them to ensure they understand their obligations with the SuperStream laws?” Mr Dunn asked.

“We’re not sure yet but if I were a betting man, I’d probably say that they would continue to take an educative approach to it. However, it would need to be looked at on a case-by-case basis.”

With the three-day turnaround for SuperStream rollovers, Mr Dunn outlined the components an auditor might scrutinise, such as ensuring that the requirements meet Superannuation Industry (Supervision) (SIS) Regulations, including 6.33D on the validation of the member’s details by the transferring fund.

“If you're rolling money out of a fund, you need to ensure that there is a mandatory use of the member tick system to validate the member’s TFN,” Mr Dunn said.

“There will need to be, in my view, evidence like a trustee minute or something provided to the auditor that clearly demonstrates that there is a series of steps that have been undertaken to be able to fully utilise the process that SuperStream requires, and then make the rollover no later than three business days after having received all the information to process the request.

“You will see auditors trying to match the rollover message, and evidence of that, which may have come out of the software. Then, they may need the transactions on the bank statements to ensure compliance with the regulation.”

Electronic service address a must

Mr Dunn also said trustees must have appropriate records on file of the individual with the ATO through the verification process and update their personal and contact details, including if their name has changed since marriage.

An SMSF must also have an electronic service address (ESA) that offers SuperStream rollover services in order to comply with the rules and enable rollover data to be sent electronically between funds via SuperStream.

While non-administration platform provider Australia Post was previously still in the process of becoming SuperStream-compliant for rollovers, they have now added it as a service offering and charge a fee for users.

“Along with the technical element, we also need to understand that regulations mandate the requirement to use this service in most instances,” Mr Dunn highlighted.

“There are some exceptions but, in most instances, if we don't comply with that, it is a compliance breach. Auditors will be paying close attention to this issue as well. Therefore, it’s about making sure that we set expectations with the clients (including the trustee and director) and ensuring that they understand their role and obligations.

“The administrator also needs to work with them to ensure that that transaction is facilitated within the prescribed timeframes as well.”

If you want your concerns addressed on the lingering pain points of SuperStream rollovers and how to navigate tech troubles, come along to the SMSF Adviser Technical Strategy Day 2022 as Aaron Dunn and a panel of speakers unpack the issues and provide guidance.

The conference will be held on Thursday 6 October at Crown Towers in Melbourne, Friday 14 October at the Four Seasons Hotel in Sydney, and Wednesday 26 October at the Brisbane Convention and Exhibition Centre.

Click here to buy tickets to the conference and secure your spot today!

For more information about the conference, including the agenda and speakers, click here.