The initial deadlines for complying with the new SuperStream contribution standard have arrived. Mark Ellem details the implementation measures needed to fall into line with the new system.
Believe it or not, the SuperStream data and payment standard for contributions has been technically in operation since 1 July. However, its effect will be more widely experienced after 3 November when the Australian Taxation Office (ATO) induction (live data testing) period ends.
Up until 3 November, only those employers and superannuation funds included in the ATO’s induction process had experience with the new standard.
While some may question the worthiness or complexity of the new standard, its benefit will come from the standardisation of the process and format of contributions made by employers.
Without a standard, employers and superannuation funds are left to deal with a multitude of different contribution methods and contribution data formats and the reconciliation of contributions with the relevant data. A standard will bring consistency to the format of data that is provided by employers to superannuation funds and will enable the process for recording this information to be streamlined, resulting in productivity benefits.
During the lead-up to the intended start on 1 July 2014 and during the induction process, we have witnessed the substantial effort the stakeholders (including the ATO gateways, superannuation funds, payroll providers, and payroll and superannuation software developers) have made to implement this standard.
Their collaborative contribution towards this new standard operating as it should from 3 November 2014, via ATO implementation workshops, extensive testing and running live data during the induction period, should provide the industry with a level of confidence the system will operate as intended.
It is useful to review the SuperStream timetable of requirements.
Medium to large employers (at least 20 employees)
1 July to 2 November 2014
While SuperStream was to apply for these employers from 1 July, only those that were in a cohort group, as part of the induction process, were sending SuperStream-compliant messages.
Medium to large employers that were not part of the induction process continued to provide contribution information in a format not per the standard during this period, provided the trustee of the superannuation fund had agreed to the non-standard format. However, the actual contribution had to be made electronically.
3 November 2014 to 30 June 2017
Employers can send contribution messages in a format not per the standard provided:
- it is agreed to by the employer and the superannuation fund, and
- the superannuation fund is Australian Prudential Regulation Authority (APRA) regulated (not SMSFs), and
- the alternative format complies with specific terms and definitions per the legislative instrument, and
- the contribution is paid electronically.
If the above does not apply, then the contribution must be sent in accordance with the standard subject to the period of grace to 1 July 2015.
If they haven’t already done so, medium to large employers should consider and select their SuperStream solution and their timetable of implementation. While the ATO and the government have provided medium to large employers until 1 July 2015 to have their SuperStream solution implemented, they will need to demonstrate they are making an effort to do so.
The ATO has previously, via mail-out, written to all medium to large employers (around 110,000), advising them of their obligations and need to prepare an implementation plan for a SuperStream solution.
Small employers (fewer than 20 employees)
1 July 2015
While SuperStream applies to small employers from 1 July 2015, they will have up to 1 July 2016 to be compliant. However, as with the period of grace for medium to large employers, they need to demonstrate they are making an effort to comply with the new rules.
Further, small employers can send contribution messages in a format not per the standard until 30 June 2017, provided:
- it is agreed to by the employer and the superannuation fund, and
- the superannuation fund is APRA regulated (not SMSFs), and
- the alternative format complies with specific terms and definitions per the legislative instrument, and
- the contribution is paid electronically.
If the above does not apply, then the contribution must be sent in accordance with the standard.
Small employers will also have the option to use the Small Business Superannuation Clearing House as their SuperStream solution. Again, the ATO provided information about SuperStream to the estimated 800,000 small employers via a recent mail-out.
Also, employers for which contributions are only made to a related SMSF, such as a company with only the trustees as employees and only making contributions to their SMSF, are not required to have a SuperStream compliance solution. Consequently, they can continue to make contributions in a format of their choice, such as by way of cheque with no associated message.
APRA-regulated super funds
1 July to 2 November 2014
Only those funds that were in a cohort as part of the induction process were able to receive SuperStream-compliant messages from employers that were also part of the induction process. Those APRA-regulated funds yet to go through the induction process will most likely be contacted by the ATO to participate in the accelerated induction process to have them SuperStream ready.
3 November 2014
APRA-regulated superannuation funds needed to be able to receive contribution messages in the format per the standard from 3 November. They could have requested a later SuperStream start date from the ATO, but:
- the application had to be made by no later than 30 September, and
- the start date could be no later than 1 July 2015.
Up to 30 June 2017, it is likely an APRA-regulated superannuation fund, other than small APRA funds, will be receiving messages that comply with the standard as well as those in an alternative non-SuperStream format.
SMSFs
1 July to 2 November 2014
While initially SMSFs were not expected to receive any SuperStream-compliant messages during the ATO induction process, a number of SMSFs did participate, as employers in the cohort groups had employees with SMSFs as their choice fund. Consequently, SMSFs have successfully received SuperStream-compliant messages during this period.
3 November 2014
SMSFs needed to be able to receive contribution messages in the format per the standard from 3 November 2014. SMSFs are not permitted to receive contribution messages in an alternative format.
The SMSF investment strategy requirements
Where the only employer contributions received by an SMSF are from a related employer, the SMSF is not required to meet the requirements of SuperStream. Further, where the SMSF is not expected to receive any employer contributions, for example, the members are retired and in receipt of pensions, the fund is not required to have a SuperStream solution.
Action for SMSFs
For most SMSFs the effort required to comply with SuperStream is relatively minimal. The hardest choice they have is the selection of an SMSF message service provider.
They can start by contacting the accountant or administrator who attends to the administration and compliance of their fund to see if they have a preferred SMSF message service provider.
Accountants, and more particularly administrators, may be using an SMSF administration software platform that can receive SuperStream compliance messages and process the contribution and related data.
For those who do not use an accountant or administrator, or the software used does not handle SuperStream, there are SMSF message service providers that can deliver a solution. While these solutions may not fully integrate, they will ensure the SMSF complies with the law and will also act as a form of substantiation of contribution details at the time of the annual audit.
The SMSF message provider will supply an electronic service address the members of the SMSF must provide to their employer, together with the fund’s Australian business number (ABN) and bank account details. Employers should already have the fund’s ABN and in most cases will have the bank details. Consequently, it should not have been a difficult task for an SMSF to be SuperStream compliant by 3 November.
The ATO provides a list of SMSF message service providers on its website. Just search “SMSF message service providers” on www.ato.gov.au
