The government wants to improve the superannuation system and bring it into the modern electronic world through the introduction of SuperStream, and this includes for SMSFs.
For small business
Under the new system, employers must interact electronically using approved software.
Employers with 20 or more employees should have already started using SuperStream from July 1 last year, but smaller employers (those with 19 or fewer employees) have until July 1, 2015 to start to comply.
Small business owners need to get their skates on to be ready in time.One relatively easy option for small employers is to use the Small Business Superannuation Clearing House to do all your superannuation for you. This online government service is already SuperStream ready, so small employers can save themselves the hassle of implementing SuperStream.
The Australian Taxation Office has set out a nine-step process to help small employers. You are not required to follow all nine steps, but it helps get your head around what needs to be done.
Step 1: Assess your options
Find the solution that suits you best. Potential solutions identified by the Tax Office include:
- if you have a payroll system, you should look for updated or new SuperStream-compliant products coming on to the market
- if you rely on external partners, check what they are planning to do and scan the market for emerging products or opportunities
- speak to your payroll software provider or clearing house about their SuperStream plans
- if you are outsourcing, speak to your payroll or accounting services provider
- if you rely on your default super fund for assistance with contributions, you should speak to them.
Step 2: Set a target start date
You must begin implementing SuperStream from 1 July 2015 onwards, but the Tax Office will provide flexibility for you on your start date, provided you are doing your best to implement and have a firm plan to do so by 30 June 2016.
Step 3: Collect new information
There is some new data you need to collect. Some relates to all funds, some to APRA funds (retail and industry funds) and some only apply to SMSFs. You need to collect:
|Information required||Type of fund|
|Fund ABN||All funds (including SMSFs)|
|Unique superanuation identifier (USI)||APRA funds (not SMSFs)|
|Bank account details||SMSFs only|
|Electronic service address||SMSFs only|
|Employee TFN||All funds (including SMSFs)|
The APRA funds will provide employers with their USI, but if not contact APRA for the information.
For existing employees, where you are paying contributions to their SMSF, your employees will need to supply the information specific to their fund. This includes the SMSF's bank account details and their electronic service address.
Step 4: Update your payroll records
Once you've collected the new information, you'll need to update your payroll records.
Step 5: Upgrade your payroll system
If you use payroll software, your software provider will be able to tell you whether an upgrade is required and, if so, when it intends to release a SuperStream-compliant version of their product.
Step 6: Connect to your provider
Depending on the solution you choose, you may need to arrange connections and security log-in credentials with your service provider or default super fund.
Step 7: Undertake a trial
Once you have done the above your service provider may provide an opportunity to test your solution.
Step 8: Make your first SuperStream
You will need to:
- run a trial payroll balance for your contributions with a subtotal for each fund
- process your payments and generate a unique reference number associated with each payment
- copy these reference numbers and add them back into your contribution files before you send the files as data messages.
Step 9: Refine your process
Review your process and determine if you need to make changes. Also keep abreast of any developments in SuperStream. You need not follow all nine steps or the order suggested by the Tax Office, but it is a useful checklist.
For SMSF Trustees
SMSFs that receive employer contributions are caught by the new SuperStream requirements and must comply with the new requirements. SMSFs that only receive contributions from related party employers do not need to comply.
There are three key pieces of information that an SMSF that receives employer contributions must provide to that employer. These are:
- the fund's ABN
- the fund's bank account details (BSB, bank name and account number)
- an electronic service address (more below).
Nearly all SMSFs will have an ABN, so this should not be too difficult, and most have a bank account that can receive electronic payments, so these shouldn't be a problem. What SMSF trustees will need to do however is get an "electronic service address". This is more than simply an email address. It must comply with the data and payment standards.
The best way to get the electronic service address is to use one of the providers vetted by the Tax Office. The main requirements of the address are that the system must be able to receive and host data messages from super funds, and translate those messages into a format that people can read. There are also requirements about system certification, operational performance and information security.
Potential benefits for SMSFs include:
- providing a more timely and reliable flow of contribution payments and data
- improving electronic record-keeping for tax and audit purposes, and
- fewer data and payment errors.
- These changes also help your employer manage contributions by providing:
- a consistent and simplified way of meeting their superannuation guarantee obligations, irrespective of type of fund
- better integration to employer payroll systems
- consistent and lower cost payment methods
- a single distribution channel for dealing with multiple funds.
The Tax Office has a register of all the approved SuperStream electronic service address. Ask this office if you are interested in seeing it.
Most of the fund administrators will already have a solution for those that use them, and BGL and Class Super will provide a free electronic service address to those that use their systems. Some providers are open to all comers while some others will only deal with clients they already have. Some will be at a cost and others for free. However be wary of those offering a free service because they may be seeking access to your SMSF for other purposes.
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