Some uncertainty remains over the process SMSF administrators must undertake as a result of the implementation of Payday Super from 1 July with regard to initial employer contributions, an accounting firm partner has said.
“One [issue] I’m trying to get some clarity on is around the member verification service,” Deloitte partner and SMSF leader Liz Westover revealed to delegates at The Tax Institute Super Intensive event yesterday.
“So the first time an employer makes a contribution, they need to [undertake] member verification and they send a message off via an ESA (electronic service address) to make sure they have the right details of the fund and the members around it.
“It is not clear at the moment exactly what that means for us as administrators and the action that we may or may not need to take in relation to the verification service.
“So I’m still trying to get some clarity on what that actually means, as in do we need to go in and actually click ‘yes, this is the right [information]’ or is it an automatic process if we know that the fund has the [correct] ESA and so on.”
According to Westover, there have been some inferences as to how the process might operate, but SMSF administrators need to be alert as to updated information on the subject in the lead-up to 1 July.
“What I’m reading is there is an active action that needs to happen, which could mean we just need to be on our toes a lot more, particularly in that first [contribution] period in particular,” she said.
Further, she warned up-to-date lodgement of SMSF annual returns will be increasingly important under the Payday Super regime due to the ATO’s compliance enforcement processes in place.
“As you know, if a fund is not up to date with its lodgements, ‘regulation details removed’ [is going to appear] on Super Fund Lookup and that is going to cause a problem [with regard to] the ability of employers to make contributions and certainly to be able to do it in compliance with the Payday Super regime,” she indicated.
In addition, she noted if the employer cannot make the contribution to the SMSF, it is likely to direct the money into its own default super fund to fulfil its own Payday Super compliance obligations. Administrators will then have to work with trustees to roll that contribution over into the SMSF.
