Estate Planning

SuperStream changes death benefit rollovers

Death benefit rollovers SuperStream

Death benefit rollovers will be treated differently under SuperStream from 1 October depending on who the beneficiary is in the eyes of the ATO.

The ATO has drawn attention to changes that will occur to death benefit rollovers under SuperStream and has highlighted these will differ depending on whether the rollover is for a dependent adult or child beneficiary.

In an update on its website, the regulator stated version three of its SuperStream Rollovers protocol will come into operation from 1 October, at which time the changes, which relate to the timing for the completion of a death benefit rollover statement, will apply.

It said that for any death benefit rollover via the system, a super fund must process the rollover electronically using the SuperStream rollover message and where the dependent beneficiary is a child, as soon as practicable, complete the death benefit rollover statement (DBRS) and send it to the receiving fund.

This differs for dependent adult and child beneficiaries where the rollover process will require the fund to give a DBRS or a statement with the same information as the DBRS to the dependent beneficiary within 30 days of the rollover payment.

“If the rollover is a death benefit and the recipient is a dependent child, this is a ‘child death benefit rollover’ and therefore the receiving fund will need to check the recipient’s date of birth in relation to the associated cashing obligations,” the regulator explained.

In separate updates, the regulator also reminded SMSFs that receive a request to roll over a member’s super balance to an SMSF that they must use the SMSF verification service (SVS) to confirm fund details, and to use the SMSF member tax file number (TFN) iIdentity check (SMSFmemberTICK) to validate the member’s TFN before making the rollover.

In regards to the SVS, the ATO stated: “Regulation 6.33E of the Superannuation Industry (Supervision) Regulations (SISR) requires funds to use an electronic service upheld by the ATO, in this instance the SVS, to verify certain information that relates to an SMSF prior to making a rollover to an SMSF.”

It noted the SVS will verify the status of the SMSF, that the TFN of the member requesting the rollover is associated with the SMSF, no verified date of death exists for that member, and SMSF bank details and its electronic service address are held by the ATO.

“The SVS will provide either a verified or non-verified response. Where the fund receives a verified response, they can proceed with the rollover request,” it said.

“Where the fund receives a non-verified response, they should advise the initiating SMSF/member so they can choose to contact the ATO to confirm their details are correct.”

With reference to the SMSFmemberTICK, the ATO stated: “Regulation 6.33D of the SISR requires any fund rolling over the whole or a part of a member’s super benefit to request a notice from the ATO validating that member’s information prior to completing the rollover. This includes any SMSF undertaking an outward rollover.

“When you send a request to the SMSFmemberTICK service, the ATO will verify the member’s details and provide either a ‘valid’ or ‘not valid’ response. Where you receive a ‘valid’ response, you can proceed with the rollover request.

“You will receive a ‘not valid’ response when we are unable to match the member details provided to our records with an appropriate level of confidence,” the regulator said, adding funds should confirm the details with the member and where they are correct, the member should contact the ATO to update those details.

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