A specialist SMSF auditor has emphasised the need for trustees of a super fund exiting member balances via a rollover to understand the two critical components to the SuperStream protocol.
“Because the liability lies with the transferring fund it means that those trustees have to understand how SuperStream works and that it has two separately moving parts,” ASF Audits head of education Shelley Banton told attendees of a recent technical webinar.
“The first one is data verification and the second one is the electronic bank transfer that has to happen within the required timeframe,” she added.
“All the receiving fund has to do is to be able to accept an electronic rollover and then [the trustees] have to allocate [the rollover] within three business days to the member, but it’s up to the transferring fund to make sure that the rollover happens electronically.”
According to Banton knowing the parameters of the SuperStream system as well as ensuring all of the necessary elements are in place to process a rollover is critical for trustees due to the unforgiving nature of the Superannuation Industry Supervision (SIS) Regulations with regard to these transactions.
“Under [regulation] 6.17 of SIS, payment of member benefits must be made strictly in line with Part 6 of the regulation. As we know a breach of [regulation] 6.17 is a reportable contravention and what Part 6 says is that a trustee must rollover or transfer an amount no later than three business days after they receive the request,” she noted.
“The issue we have with the rollover timeframe under Part 6 is if trustees can’t meet this three-day requirement they could receive a compliance breach for the very first time even though it’s not their fault,” she explained.
“I guess the question surrounding this is where is the mischief? But unfortunately the SIS legislation doesn’t allow for problems which are outside the trustees’ control.”
She pointed out a breach of SIS Regulation 6.17 comes with a 20 penalty unit notice currently worth $275 per unit.
