SuperStream changes for employers and Self Managed Super Funds
As a result of a recent 12 month deferral announced by the Federal Government, SuperStream commences from 1 July 2015 for employers with 20 or more employees and from 1 July 2016 for employers with less than 20 employees, though early adoption is possible. Additionally, SuperStream measures have implications for Self Managed Superannuation Funds which receive contributions from such employers.
What is SuperStream and what does it require?
SuperStream, otherwise known as the Payments & Data Standards, is a requirement for all businesses to submit contribution payments and related information electronically in an approved format.
The information that is required to be submitted includes:
- Employer details (the sender)
- Employee details
- Contribution types and amounts
- Payment details including a unique payment reference number
Some employers may also choose to provide additional data.
The rationale behind SuperStream is to ensure that employer contributions are paid in a consistent, timely and efficient manner, while the complexities associated with different processes accepted by different super funds are removed.
Who has to comply with SuperStream?
From 1 July 2014, all employers with 20 or more employees (measured as at 1 July 2014) will be able to make super contributions in accordance with SuperStream, if they wish. From 1 July 2015 compliance with SuperStream will become mandatory for employers with 20 or more employees.
The other employers will come into the regime 12 months later with compliance becoming mandatory from 1 July 2016. However, voluntary adoption of SuperStream will be available from 1 July 2014.
Self Managed Superannuation Funds (‘SMSFs’) will find themselves on the other end of SuperStream measures – they need to be able to receive the contributions electronically as well as the associated information via a data file.
An exemption exists for SMSFs that receive contributions only from related party employers. However, where an SMSF receives contributions from both a related party employer and from a non-related party employer, then the SMSF will need to comply with SuperStream.
I’m an employer, how do I comply with SuperStream?
There are several options available to you:
- Upgrade your payroll software to a product that accommodates SuperStream requirements. For example, MYOB are in the process of integrating SuperStream service directly into AccountRight Live Plus and MYOB Essentials products (formerly “Live Account”), while users of the classic AccountRight products will be able to access SuperStream through M-Powered Superannuation. We expect more details about the integration and pricing to become available soon. Xero has released the updated payroll function which includes its "auto super" feature that will allow users to meet their SuperStream obligations.
- Use an outsourced payroll service provider. This option could mean handing over much of the administration of your payroll including superannuation.
- Use a commercial clearing house or the free Small Business Clearing House (available through the ATO for employers with 19 or fewer employees).
Please note that the use of a clearing house will add processing time between the sending of the contribution and the receipt of it by super funds. This additional time will need to be factored in when making contributions so that they are received within the prescribed 28 days following the end of a quarter.
You can find further information regarding the free Small Business Clearing House here: http://www.ato.gov.au/sbsch
Please note that providing contribution data via email will not meet the SuperStream requirements.
Further details regarding SuperStream functionality of various payroll software providers are expected to be released in due course. It is anticipated that some of the above options may have a fee attached.
I have an SMSF, how do I comply with SuperStream?
All super funds will have to receive all employer contributions in accordance with the SuperStream requirements, once the regime becomes mandatory. This will be either 1 July 2015 or 1 July 2016, depending on the size of the employers which contribute to the SMSF.
However, if your SMSF receives contributions from an employer that chooses to adopt SuperStream early, you may wish to take advantage of the expected efficiencies and make your fund SuperStream compliant at the same time.
TIP: Contributions sent to an SMSF from a related-party employer are exempt from SuperStream and can continue to be made under existing processes. However, the rules defining who is a related party are complicated – please contact us to discuss this if you think it may be relevant to you.
If your SMSF receives contributions from any non-related party employers, the fund has to:
- Inform the employer(s) making contributions of the SMSF’s ABN and bank account details (BSB and account number).
- Provide the employer(s) with the fund’s electronic service address (‘ESA’) for receipt of a contribution data message.
The electronic service address can be obtained by registering the fund with an SMSF messaging provider, a register of which is maintained by the Tax Office.
TIP: Australia Post is one of the SMSF messaging providers registered with the Tax Office. The cost of their service is $50 for a 12 month subscription.
Do I need to do anything if my SMSF is administered by Ruddicks?
The providers of our SMSF administration software have set up an electronic service address which SMSFs can use to comply with SuperStream. We have been advised that the upcoming update of the software will incorporate the electronic service address and SuperStream features.
Accordingly, we recommend that trustees of SMSFs administered by us hold off on obtaining their own ESA – we will communicate the details of an ESA in due course, allowing you plenty of time to meet your obligations before 1 July 2015. We are hopeful that this will be the most efficient and cost effective solution for our SMSF clients and we will update you once further details and any costs are known.
Please contact your Ruddicks adviser if you have any questions regarding the implications of SuperStream measures for your business or for your SMSF or if you require any assistance with the transition to the new process.
DISCLAIMER: The contents of this publication are general in nature and we accept no responsibility for persons acting on information contained herein. The content of this article does not constitute specific advice and readers are encouraged to consult a Ruddicks adviser on any matters of interest. © Ruddicks 2014