Employers making superannuation guarantee (SG) payments into SMSFs under the Payday Super regime may find the process does not run smoothly due to non-compliant actions of employees who are trustees, an industry specialist has predicted.
ACIS SMSF services director Peter Johnson said the commencement of Payday Super on 1 July meant employers must be familiar with qualifying earnings, which includes all forms of income paid to an employee, how to report those by single touch payroll, and the frequency of payments.
Johnson said these changes are likely to be more problematic where an SMSF is the fund receiving payments.
“If you only have related employee payments going to an SMSF, I think that is going to be okay, but unrelated SMSFs will be a burden,” he said during an online briefing yesterday.
“If your client has staff that have an SMSF, it is going to be a nightmare because those people may not lodge their returns on time. They will have their fund’s compliance details removed [from Super Fund Lookup]; even where they are related that is likely going to happen.
“You are not allowed to say: ‘Sorry, we’re not going to allow you to put your super in an SMSF.’”
Johnson said there had been some industry discussion about asking the government to allow employers to not pay superannuation to SMSFs under the Payday Super regime due to the potential difficulties and problems, but currently SMSFs were included in the new system.
He also provided a tip for how employers can maximise the time it takes to process an SG payment under the Payday Super rules.
“From 1 July, all employers have to be making Payday Super payments and you have got seven business days [for funds to be received by an employee’s fund],” he said.
“So pay super on Thursday or Friday because if you pay it on those days, you have two weekends before seven business days hits, and in actual fact you are getting 11 days, whereas if you pay it on Monday, Tuesday, Wednesday, you get nine days to pay super.”
Jason Spits
SENIOR JOURNALIST
Jason is a senior journalist with Benchmark Media and writes for the selfmanagedsuper website and magazine and smstrusteenews website. He has covered financial services since 1999 and has written about life insurance, superannuation, investment management and financial advice, in both a freelance and in-house capacity, and also did a brief stint as a media manager for an industry association. He has been the editor of trade titles Money Management and Financial Standard, and was most recently senior journalist with life insurance title Riskinfo.
Articles by Jason