What is SuperStream?
SuperStream is a major government reform aimed at improving the efficiency of the “back office” of superannuation. The main purpose of SuperStream is to ensure employer contributions are paid in a consistent, timely and efficient manner to a member’s account. It requires contributions to be made electronically with linked data and payments. So this means no more cheques or paper remittances. Instead there is now a consistent electronic format for sending payments and contribution information.
Is it compulsory and who does it apply to?
SuperStream is mandatory for all employers making superannuation contributions, APRA-regulated super funds and self-managed superannuation funds (SMSF) receiving contributions. It is being phased in over the next two years depending on the size and, in some situations, readiness of the employer.
SuperStream will not affect a SMSF if:
- it does not receive any contributions from an employer;
- it only receives personal contributions made by members; or
- contributions to the fund are only made by related party employer(s). Broadly, a related party is an employer that is controlled by one or more members of the SMSF or their related parties. For example, a company is controlled if the members and their associates control more than 50 per cent of the voting shares or they exert significant influence.
When do the new rules start?
If employers have 20 or more employees (medium to large employer) SuperStream starts from 1 July 2014. However, the ATO is being flexible on the start date provided the employer is doing their best to implement SuperStream and has a firm plan to do so no later than 30 June 2015.
If employers have 19 or fewer employees (small employer), SuperStream starts from 1 July 2015 and employers have until 30 June 2016 to meet the SuperStream requirements when sending superannuation contributions on behalf of employees. Employers, however, can voluntarily adopt the SuperStream from 1 July 2014 if they are ready.
Practicalities for employers
How do employers register?
Every business is different, so there’s no ‘one size fits all’ approach to adopting SuperStream.
Employers have the option for meeting the SuperStream requirements by either using software that conforms to SuperStream or using a service provider who can meet the SuperStream requirements on their behalf.
Employers’ options may include:
- upgrading their payroll software;
- using an outsourced payroll function or other service provider; or
- using a commercial clearing house or the free Small Business Superannuation Clearing House (19 or fewer employees).
An employer’s default fund may also have its own electronic facility that can be used during the transitional period up to 30 June 2016. This fund can provide the employer with details about how to comply with SuperStream using their preferred facilities.
What action should employers be taking now?
To support contributions being made using the SuperStream standard, employers will need to collect the following information:
- unique superannuation identifier (USI) for APRA-regulated funds;
- ABN for SMSFs;
- bank account details; and
- electronic service address.
For existing employees, simple processes will be implemented to enable employers to obtain this information. This may include receiving information:
- direct from their default fund;
- via employees who have elected a choice fund (such as a SMSF); or
- through a clearing house.
Employers will need to contact their payroll software provider or other service provider to understand their SuperStream implementation strategy and to help them complete the appropriate upgrades, etc.
Practicalities for Self Managed Super Funds
The requirements for SMSFs are relatively straightforward. The member needs to provide their employer with the SMSF’s ABN, bank account details, and an electronic service address which allows delivery of remittance information.
How can the SMSF arrange an electronic service address?
The ATO has published a list of SMSF messaging service providers on its website to assist trustees in finding a provider with the right service and commercial offer. The relevant link to the ATO website is as follows: https://www.ato.gov.au/super/superstream/in-detail/contributions/smsf-messaging-service-providers/ Some financial institutions are also providing the service for free if you use their bank accounts.
What action should SMSFs be taking now?
SMSF trustees associated with medium and large employers should start preparing now for SuperStream to ensure they are ready to receive contributions electronically.
The member of the SMSF should check with their employer to see when they will start using SuperStream. When their employer starts implementing SuperStream, the trustee of the SMSF should be ready at the same time. The ATO will provide compliance flexibility until 30 June 2015 for trustees associated with medium and large employers, but this flexibility will only be provided where a genuine attempt to get ready is being made by the trustee.
Trustees associated with small employers have another year before their legal obligations come into effect.