SMSF trustees using SuperStream to process a member balance rollover after winding up their fund are almost guaranteed to fail the requirement to complete the transfer of assets within three days due to limits built into the system, a technical specialist has noted.
ASF Audits head of education Shelley Banton stated this requirement is outlined in the Superannuation Industry (Supervision) Regulations, however, it was still causing trustees problems as it clashed with the maximum daily withdrawal limit imposed by banks.
“[Having to process multiple transactions for a rollover is an] issue that was not identified before SuperStream was put in place, which is a problem because this is one of the biggest issues that we’re seeing,” Banton told attendees of a webinar hosted by the Institute of Financial Professionals Australia today.
“The reason is that banks have limits on withdrawal amounts so the trustees can’t withdraw the entire amount at once. It has to be done in several transactions over multiple days.
“Where that process exceeds the three-day requirement, it’s going to be a breach of regulation 6.17 because it is technically a fail. The trustee is really set up to fail the payment standards.”
She explained part of the issue could be attributed to inadequate preparation or trustees lacking information about the rollover process and what details they would need to furnish to initiate the three-day window to roll over assets.
“To be clear, there needs to be four pieces of information that gets the clock ticking, which means you need to have the name of the receiving fund, the Australian business number, the electronic service address, the member number and a legitimate request,” she said.
She further noted the ATO was aware of the difficulty some trustees were experiencing due to the three-day rollover window and anticipated a solution from the regulator to rectify the issue.
“From my understanding, they’re looking at these types of situations and we may be seeing some information coming out from the ATO in the future, which means we may have some exceptions that we can apply to known issues,” she said.
“An example of that could be there may be an exception given if that first transaction was undertaken within the three-day timeframe, even though the other completed transactions were not [completed by then].
“If that happens, that’s going to be a little bit more of positive reinforcement that the ATO is taking a commercial and sensible approach to stop this unnecessary red tape, which SuperStream was supposed to fix.”