Starting from 1 July 2014, new superannuation data standards are being introduced. The new data standards will be introduced progressively over the next 2 years.
The new standards require many common super related transactions to be conducted electronically and will apply to both employers making super contributions for their employees and to self managed superannuation funds receiving employer super contributions.
The new rules, known as ‘SuperStream’ is a government reform aimed at improving the efficiency of the superannuation system in Australia.
The new rules are summarised in detail below.
We note that contributions sent to an SMSF from a related-party employer are exempt from SuperStream and that current processes for making and accepting contributions can remain in place.
- From 1 July 2014
- Employers with 20 or more employees will start using the SuperStream standard to send contributions data and payments electronically
- All superfunds (including SMSF) must receive any employer contributions sent to their fund in accordance with the SuperStream standard
- From 1 July 2015
- Employers with 19 or less employees will also be required to send contributions data and payment electronically
Employer super contributions
Employers will need to make the physical payment of super contributions for their employees, plus transfer the associated contribution data, to the relevant super funds electronically to comply with the new rules (All employer super contributions are captured)
In addition to new contribution standards, new default member registrations initiated by an employer and the ongoing maintenance of employee member details will also need to be conducted electronically.
How to comply
For most employers the practical way of ensure you comply with the new rules will be to use the services of a superannuation clearing house. A Superannuation Clearing House is a service that will pay multiple super funds from one data file and one payment received from the employer
The clearing house will then transfer superannuation payments to each fund using its own system.
A large majority of small business accounting packages (i.e. Xero and MYOB) have this technology built into their Payroll systems
We also advise that the Federal Government operates a free clearing house for employers with 19 or less employees called the ‘Small Business Superannuation Clearing House’
For those employers with 20 or more employees who do not have software available to provide the clearing service, we advise that there are service providers that operate on a fee for service basis (i.e. QuickSuper and SuperChoice)
Self Managed Superannuation Funds
SMSF’s that receive employer contributions (from non related employers) must be able to receive the electronic payment and data details their employer is required to send. A SMSF may need to comply with the new rules from as early as 1 July 2014 depending on the size of the employer making contributions to the fund. It is our recommendation that SMSF’s register for the new standard for the year commencing 1 July 2014.
How to comply – SMSF’s
Self Managed Superannuation Funds impacted by the new standard need to engage a SMSF messaging service provider. For SMSF clients of HTA Advisory we have recommend that Australia Post be used as the messaging service provider, as this is currently the only SMSF messaging service that can support SMSF’s.
Australia Post have a $25 cost for a 12 month subscription to its messaging service. We expect that as the new system is further implemented that additional messaging service providers will enter the market to assist SMSF with their new compliance obligations.
Where you do have a SMSF and the new standards apply it will be necessary to ensure that your employer is provided with the following information:
- 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
To assist SMSF clients with this process we have linked to this article a template letter that can be provided to employers to provide them with the required details.
We understand that many employers and trustees of SMSF’s will not be familiar with the new rules so we ask that you contact HTA Advisory to discuss any questions you have regarding the new standards as well as the processes to be introduced to ensure your compliance with the new SuperStream standards.