Acceptance of rollovers and contributions
Superannuation Industry (Supervision) Amendment Regulation 2012 (No 5) and Superannuation Data and Payment Standards 2012 Legislative Instrument
As part of the SuperStream measures, super funds will need to follow electronic service and payment standards for transactions involving contributions and rollovers.
These new electronic standards will be phased in for SMSFs as follows:
- 1 July 2013 – Australian Prudential Regulation Authority (APRA) funds will be able to pay rollovers to SMSFs if the relevant electronic service and payment details are provided.
- 1 July 2014 – All contributions from medium and large employers must be received in the data and e-commerce standard (unless related-party employer).
1 January 2015 – The new standards will apply for payments and receipt of rollovers (subject to introduction of a new regulation). - 1 July 2015 – All contributions from all non-related employers (including small employers) must be received in the data and e-commerce standard.
Contributions from a related-party employer are exempt from the data message requirements under regulation 7.07F(2). This will assist small business owners paying their own super contributions into an SMSF.
SMSFs will need to review administration systems to ensure they can receive these electronic messages and payments through an administrator, upgraded financial accounting software or subscription to a message delivery service.
The Australian Taxation Office (ATO) provides a video on its website, titled “SuperStream data and e-commerce standard: An overview for funds”, which can help in the understanding of the obligations.
Tax for deceased pension members
Exposure Draft: Income Tax Assessment Amendment Regulation 2013
This draft regulation will implement the announcements in the government’s 2012/13 Mid-Year Fiscal and Economic Outlook to allow the exemption on pension earnings to continue until the death benefit is paid.
This allows assets supporting a pension to be sold to pay a death benefit lump sum without incurring capital gains tax. This will make “Tax Ruling TR2011/D3” ineffective.
Pensions and SMSF annual returns
SMSFs need to ensure they only claim appropriate tax deductions if income streams are paid from the fund. The ATO has identified many cases of incorrect claims in recent years.
To minimise the scope for error, the tax office made a significant change to the 2012 SMSF annual return.
Label Y Exempt current pension income is now included in Section B: Income of the SMSF annual return and replaces label K (previously recorded in Section C: Deductions).
Monitoring of tax deductions claimed and the income classified as exempt current pension income will both be monitored by the ATO as part of its ongoing compliance activity.
Rollover benefit statement changes
A new rollover benefit statement (RBS) form needs to be used for all rollovers from 1 July 2013. This will also affect the contributions reporting in the 2014 SMSF annual return.
From 1 July, all contributions received by an SMSF must be reported to the ATO by the SMSF even if they are transferred to another fund before the end of the financial year. All contributions received during a year will be reported by the SMSF in section F of the annual return.
In line with this change, the RBS will no longer provide contributions information to another fund with the rollover. The current year contribution labels at section C item 15 of the RBS will be removed.
SMSFs will effectively need to give annual statements about every member to the ATO each financial year, including members who rolled out during the year.
Co-contribution changes
Tax and Superannuation Laws Amendment (2013 Measures No 2) Bill 2013
Proposals to reduce the co-contribution to a maximum of $500 with a 50 per cent matching rate have finally found their way into legislation before Parliament. This change (if passed) will be effective for the 2013 financial year.
For example, a client with adjusted taxable income below $31,920 may qualify for a $500 co-contribution if at least $1000 of non-concessional contributions are paid into their super account.
Changes to SMSF levy
Once again the SMSF levy is proposed to increase, with a rise to:
- $191 in 2012/13, and
- $259 per year from 2013/14 onwards.
The timing of the payment will be brought forward so it is levied in advance rather than in arrears. This will be implemented with a two-year phase-in so that half of the 2013/14 levy will be payable with the 2012/13 levy when the 2013 annual return is lodged.
