SMSF practitioners who have clients yet to lodge their annual return or update critical information should encourage them to act with haste to avoid superannuation guarantee (SG) contributions being redirected to another fund after 1 July, a technical manager has stated.
Heffron head of education and content Lyn Formica said the payment of contributions under the Payday Super system, which starts next month, will consider the status of an SMSF on the ATO’s Super Fund Lookup before allowing any monies to be processed.
“Normally speaking, when an employer tries to make a contribution to a SMSF, the payroll system will look at Super Fund Lookup and see whether it says the fund is complying,” Formica said during a recent technical webinar.
“If the fund’s status is ‘regulation details withheld’ or ‘regulation details removed’, that is a trigger for the payroll system to state no contribution can be made to that superannuation fund.
“In that situation the employee needs to choose a different fund otherwise contributions are going to be made to a stapled fund or a default fund.”
She said regulation details were withheld when the ATO was reviewing an SMSF because of a change of trustee or directors or the addition of new members and it wanted to examine the fund’s structure to ensure the right people were in it. Regulation details were removed when an SMSF annual return was more than two weeks overdue, she noted.
“Late lodgement is more problematic under the Payday Super system because contributions are going to be made more often, so we are going to have more problems where SMSFs aren’t having their returns lodged on time,” she added.
“If you have got a fund that didn’t lodge on 15 May, you have probably got an extension till 12 June and if you don’t get any further extensions and still don’t lodge by 1 July, fund details on Super Fund Lookup will be turned into ‘regulation details removed’.
“If payday is 2 July and an employer tries to put a contribution in, it’s going to get rejected.
“If you have got clients with SMSFs which still haven’t lodged and they’ve got SG contributions coming into them, you need to prioritise those funds and get them lodged so they don’t end up with situations where that employee has to choose a different fund for their SG contributions while their fund has outstanding returns.”
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