In a recent online update, the ATO has outlined when SMSF auditors should report contraventions of the SuperStream rollover rules and what evidence is needed.
SMSF auditors are required to report contraventions for non-compliance with the SuperStream rules where the rollover was requested on or after 1 October 2021 and the contravention meets the ACR reporting criteria.
Where auditors identify non-compliance with the Division 6.5 rules and a contravention of regulation 6.17, the ATO said they will need to notify the fund in writing, report the contravention via an ACR at Section E provided the reporting criteria is met, describe the event and provide the reason why.
They will also need to modify Part B of the SMSF Independent Auditor’s Report if the contravention is material.
The ATO stated that while non-compliance with any of the SuperStream rules is a contravention of regulation 6.17, it does not expect auditors to report all contraventions for ACR purposes.
Where the SMSF is the transferring fund
Where the SMSF is the transferring fund, the ATO said the auditor will need to obtain evidence confirming that the SMSF received the rollover request, which may have come from the member, receiving fund or ATO if a member makes a request via the ATO’s Online services which generates an electronic portability form to the fund.
Evidence could include a copy of the member’s rollover request or a printout of the ‘initiate rollover request’ (or equivalent) message from the receiving fund’s SMSF messaging provider, the ATO stated.
The auditor will also need evidence that the rollover was paid and information was given to the receiving fund via SuperStream.
“Evidence could include bank account and transaction details [and] a printout of the ‘rollover transaction request’ (or equivalent) message from the transferring fund’s SMSF messaging provider,” the ATO stated.
They will also need evidence confirming that information was given to the receiving fund via SuperStream.
The ATO also said there needs to be evidence that the rollover occurred no later than 3 business days after receiving the rollover request and if applicable, any additional information required to process the request.
Evidence could include rollover request details, bank account and transaction details or additional information requested and provided.
Where the SMSF is the receiving fund
Where the SMSF is the receiving fund, the auditor will need to obtain evidence confirming that the SMSF used SuperStream to request the rollover from the transferring fund.
Evidence might include a printout of the ‘initiate rollover request’ (or equivalent) message from the receiving fund’s SMSF messaging provider.
The ATO said there also needs to be evidence showing that the rollover was allocated to the member within 3 business days after the fund received the rollover payment and the message containing all the information required to enable it to occur.
Evidence could include bank/member account and transaction details and a printout of the ‘rollover transaction request’ (or equivalent) message from the transferring fund’s SMSF messaging provider.
“If a trustee fails to comply with these obligations because a fund does not have an ESA, this is a contravention of regulation 6.17 of the SISR. You may need to report the contravention to us and the trustees if the temporary measure for issues obtaining an ESA does not apply,” the ATO stated.
“Trustees must also give us their ESA for inclusion in the SuperStream register to comply with section 34Z of the Superannuation Industry (Supervision) Act 1993. Failure to comply with this obligation is an offence of strict liability.”
The ATO noted that where trustees have attempted to obtain an ESA but had issues doing so, a temporary measure was implemented for 2021–22 income year to help facilitate rollovers. It only applies to rollovers from an SMSF and between SMSFs.
“Where a trustee has approval to make a rollover outside of SuperStream using the paper process, you do not need to report a contravention. Trustees must provide you with the reference number for approval,” it stated.
“If a trustee uses the paper process without our approval, you need to report a contravention of regulation 6.17. Find out from the trustees why this occurred and include this when lodging an ACR.”
In an smsf the member is the trustee. If there is a delay it’s because the trustees don’t agree and there is a relationship breakdown. Smsf assets are invested. Investments can’t always be liquidated without suffering losses that could be avoided by a managed exit. 3 days is just inappropriate.
I wouldn’t be initiating the rollover until the trustees have taken all the steps to fund it/sell investments and document these resolutions and rollover request, even have checked with the bank that they will permit the internet transfer if outside daily limits. Only then do you push the button on SuperStream and start the 3 day window.
I had hoped the ATO would recognise superstream regulations include a statutory time limit of 3 days and only require ACR if that time limit is breached by more than 14 days as is the case with other reportable sections.
Trustees were simply not ready for SuperStream. How can the auditor determine if the non-compliance with an administrative issue is material. You either comply with the regulation or you do not. Most issues regarding non compliance with SuperSteam are a result of data matching errors, limits on cash transfers and APRA funds wanting payment by cheque or transfer outside of SuperStream. SuperStream is not fit for purpose and if the ATO starts issuing administrative penalties for non-compliance they will make millions
To say SuperStream is not fit for purpose is overly harsh and incorrect. Sure – it’s a work in progress and the lack of education and communication around has been wanting, but when it works, it works well.
Example from last week: SMSF member triggered a transfer from an APRA fund (UniSuper) and the rollover request was approved within 3 hours and money hit the SMSF cash account next day.
The real question that should be asked is: Will APRA provide the same level of scrutiny with the compliance of industry and retail funds when it comes to them meeting their obligations under the SIS Regs in terms of the 3-day timeframe? I’d like to see their compliance with SuperStream. I guarantee most funds will be worse than the SMSF sector!