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The real impact of SuperStream on SMSFs

By Daniel Butler
14 May 2014 — 7 minute read

A recent draft legislative instrument serves as a reason to re-examine SuperStream and its impact on SMSFs, super funds and employers. 

Broadly, the SuperStream reforms are designed to address inefficiencies in ‘back office’ processing by:

-improving the quality of data in the system;

-allowing the use of tax file numbers (TFNs) as the primary locator of member accounts;

-encouraging the use of technology to improve processing efficiency; and

-improving the way fund-to-fund rollovers are processed and the way contributions are made.

Previously, there have been no prescribed data or payment standards for transactions. Moreover, there has been widespread use of cheque payments and paper-based forms resulting in poor quality data, processing delays, and duplicated or lost member accounts. This gives rise to significant processing costs.

This article focuses on how the new payment and data transfer standards will impact superannuation funds, especially SMSFs and employers. Broadly, the measures were originally planned to apply from 1 July 2014 but a draft legislative instrument soon proposes to defer this date to 3 November 2014.

Superannuation funds

Regulated superannuation funds (ie, both APRA funds and SMSFs), must be ready to receive contributions and data in the new electronic standard from 3 November 2014.

Broadly, this means each superannuation fund will need to obtain an electronic service address. For most APRA funds, this should not prove problematic. However, for many SMSFs this requirement can seem overwhelming.

Thus, SMSFs and APRA funds must be SuperStream ready from 3 November 2014. This deadline applies even if the fund receives contributions from a small employer (with 19 or fewer employees).

In relation to SMSFs, the ATO has indicated that:

There are a range of options for meeting your SuperStream obligations. Each option involves providing your employer with:

-your SMSF's Australian Business Number (ABN)

-your SMSF's bank account for receipt of contribution payments (BSB and account number)

-an electronic service address for receipt of a contribution data message.

Depending on how you manage your SMSF, you may choose to engage a service provider such as an SMSF administrator or software provider.

You will, however, need to ensure your SMSF bank account is able to receive electronic contribution payments and your SMSF can receive a contribution message with information about these payments in the SuperStream format.

Fortunately, most major SMSF software suppliers and large SMSF administrators have strategies to enable SMSFs to readily comply with the new standard on time. Indeed, a range of different options are now available to SMSFs. The ATO has published a register of SuperStream messaging solution providers that can assist SMSF trustees to meet this obligation (note that some on this list are free of charge).

Naturally, appropriate due diligence regarding the service provider should be undertaken as a number of legal and practical risks relate to electronic gateways. For example, how are privacy issues, mistaken payments and complaints dealt with? Trustees should carefully review the detailed terms and conditions of each service provider. In doing so, bear in mind that electronic gateways offered by non-bank institutions do not necessarily have the same rigorous protocols in place.

Medium and large employers

Medium and large employers are those with 20 or more employees.

1 July 2014 to 2 November 2014 transition-in period

During this transition-in period:

-superannuation entities may choose to have the capability to receive contribution standard-compliant messages from employers; and

-a medium or large employer can send employee registration and contribution messages in any electronic format that a superannuation entity is willing to accept. Contributions must also be made using an electronic payment method acceptable to the trustee.

Superannuation entities must advise employers what electronic format and payment methods they will accept during this period by ensuring this information is easily accessible, eg, by putting such information on the fund’s website.

3 November 2014 to 30 June 2017 alternative option for APRA funds

Alternatively, an APRA fund (not an SMSF) and medium and large employers can agree to use a prescribed transitional arrangement from 3 November 2014 to 30 June 2017.

Otherwise, from 3 November 2014, the SuperStream electronic format and payment methods apply to medium and large employers.

Small employers

The main difference in the SuperStream rules applicable to small employers (ie, those employers with 19 or fewer employees) compared to medium and large employers is that the start date is 1 July 2015 rather than 1 July 2014. Also, the alternative option agreed between an APRA fund (not an SMSF) and a small employer applies during the period of 1 July 2015 to 30 June 2017.

Thus, small employers must generally be SuperStream ready from 1 July 2015. Small employers can also utilise the free services offered by the Small Business Superannuation Clearing House to streamline their compliance.

All employers

Employers will need to adapt their payroll systems and processes to ensure they are able to make reporting and contributions in the required electronic format.

Many default MySuper providers are also developing solutions for employers, as are numerous outsourced payroll providers.

Employers need to check on employees who have previously nominated their SMSF as to whether they are SuperStream ready. In the event that a given employee’s SMSF cannot provide evidence of the three criteria listed above (ie, ABN, bank details and electronic service address) prior to the relevant contribution time, then follow-ups will need to occur. We recommend that medium and large employers commence this process as soon as practicable to ensure their employees with SMSFs are making an effort to get their arrangements in place for the relevant start date.

In the event these follow-ups do not result in timely action, employers should communicate with the employee regarding an alternative arrangement. Some employers, for instance, may seek to contribute to a default MySuper product where the employee is covered by a relevant award or industrial agreement. However, employers will need to be careful to comply with their obligations under any employment agreements, award or industrial instrument. They will also need to ensure contributions are made in a timely manner so as not to miss a relevant quarterly deadline under the superannuation guarantee system and also not to expose themselves to any risk under the award, choice of fund or other applicable arrangement.

SMSFs and related-party employers

Contributions made to an SMSF from a related-party employer are exempt from SuperStream. These can therefore be made using existing processes. Typically, this will cover the situation where a business is run by one or two members and the business contributes to their SMSFs. In this case, the payment and data standards are not compulsory. However, they can be used if preferred.

Broadly, a relevant related party is an employer that satisfies the following:

-the employer is controlled by one or more members of the SMSF or their related parties as broadly defined in part 8 of the Superannuation Industry (Supervision) Act 1993 (‘SISA’). For example, a company is controlled if the members and their part 8 associates control more than 50 per cent of the voting shares or they exert significant influence; or

-the employer is a ‘standard employer-sponsor’ (ie, an employer who contributes to the SMSF pursuant to an arrangement between the SMSF trustee and the employer). It is important to check the governing rules of the SMSF to confirm whether there is a deed of participating or related employer or like document that evidences such an arrangement.

Employers can use the Fund Validation Service (‘FVS’)

The FVS is a free web service developed by the ATO that will allow employers to look up or validate e-commerce details of APRA funds (not SMSFs). Employers will have ready access to information on all APRA funds such as the fund’s:

-name and ABN;

-bank account name and number; and

- electronic service address.


Some frequently asked question include:

Does an SMSF have to be SuperStream ready by 3 November 2014 if it only receives contributions from a related-party employer?

No. Bear in mind, however, that the regulations specify that superannuation entities (which covers both SMSFs and APRA funds) must be ready to receive contributions from 3 November 2014 in the new format. However, there is an exception if an SMSF only receives contributions from a related-party employer. If an SMSF receives contributions from any other employer, it will need to be SuperStream ready by this deadline.

Technically, if an SMSF does not receive any employer contributions, the regulations nevertheless suggest the fund must be SuperStream ready as the only exception is where related-party employer contributions are received.

However, unless there is some other reason to be SuperStream ready, one would argue that the regulation should be construed to mean there is no need to be ready if there are no employer contributions.

What if an SMSF receives a cheque from a non-related employer after 3 November 2014, does it have to return that cheque?

There is a specific regulation for APRA funds requiring them to return contributions within a prescribed timeframe if the contribution is not compliant with the new format. However, there is no similar regulation for SMSFs.

Thus, an SMSF can either bank such a cheque or return it if it is received after the start date. There is no penalty for doing so as the SMSF is compliant and the relevant obligation here falls on the employer. Also, the ATO will take an educative approach to compliance in the initial 12 months.

Can I continue to make contributions using cheques?

From 3 November 2014 an employer with 20 or more employees will only be able to use cheques if the employer is making contributions to an SMSF to which it is a related party. Otherwise, the new data and payment standards apply and the payment must be made electronically. Small employers are similarly covered from 1 July 2015 unless they are a related party making contributions to a related SMSF.

ATO Compliance

The ATO is responsible for ensuring employers and SMSF trustees comply with their obligations under the standard.

The ATO’s compliance statement confirms that the focus will be on education and support for employers and SMSF trustees during the first 12 months that they are required to comply with SuperStream. The ATO has stated, for instance, that in the event that the new system is not working temporarily (eg, due to internet problems), an employer can still discharge their super guarantee obligations by using alternative channels (paper or electronic) and by informing the fund of the reasons for sending it in this format.

Note, however, that after the applicable first 12-month period, there are significant penalties that can be imposed for non-compliance with the new SuperStream rules.


Both superannuation fund trustees, especially SMSFs, and employers need to ensure they get ready for SuperStream. Fortunately, there are now a number of services around and you should take timely action to determine what changes are needed and what action is required in view of your circumstances.

Daniel Butler, director, DBA Lawyers



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