By Anthony Cullen
SMSF Technical Specialist
What is SuperStream?
SuperStream is a Government initiative response to the 2010 Super System Review (Cooper Review) into governance, efficiency, structure and operation of the Australian superannuation system. SuperStream initially created a system whereby employers could make superannuation contributions for their employees in a simplified and more efficient standard process by requiring payments and relevant data to be transferred electronically.
Over time, the system has evolved to incorporate movements of benefits within the superannuation system. Australian Prudential Regulation Authority (APRA) funds have been required to use SuperStream to rollover member benefits to other APRA funds for a few years now. Transactions involving the ATO, such as Government co-contributions, have also occurred via SuperStream.
What are the changes for SMSFs?
As of 31 March 2021, a transitional period commenced requiring rollover of member benefits to and from Self Managed Superannuation Funds (SMSF) to also comply with the SuperStream standards. This transitional period will last until 30 September 2021, with adherence to SuperStream compulsory from 1 October 2021.
These changes should see transfers from APRA funds to SMSFs happen in a more timely manner with payments being required within three business days and to be made electronically. While this is welcome news for the SMSF members and the industry, what may not be fully appreciated at this stage is that transfers out of SMSFs will also need to comply with the same standards. A timeframe that may prove problematic for funds that are only processed on an annual basis.
Another key point that will need to be considered is the fact that transfers of member benefits in cash, using SuperStream, will need to occur electronically (in-specie transfer of assets will fall outside of the SuperStream requirements). Any data associated with a transfer, i.e. Rollover Benefit Statement (RBS), will also need to be supplied in electronic format on the same day as the payment is made. It is not uncommon in today’s environment that transfers occur via cheque one day, and the RBS is provided some time later, once the accounts are brought up to date to determine preservation and tax components.
Necessary changes are likely to result in a greater requirement for accountants/administrators and advisers/clients to work more closely together to get the fund details up to date, but also to coordinate the transfer of the benefits and the data. Given the latter often tend to the payment side of the transaction and the former the data/paperwork side, working together will be key.
In addition to rollovers, release authorities in relation to payments such as excess contributions, Division 293 (high income earner contribution tax) and First Home Super Saver Scheme (FHSSS) will also be issued via SuperStream from 1 October 2021 (or earlier if a fund is SuperStream ready – more on this later). Once again, this will require all parties working together to ensure all information and payments required to be supplied to the ATO in response to the release authority are coordinated.
Getting SuperStream ready
For those accountants/administrators using a reputable and dedicated software program to administer their SMSFs, you’ll need to wait for those systems to be updated to incorporate the changes. SuperConcepts’ SMSF software SuperMate, is working alongside other major suppliers to get these systems ready, with comprehensive testing across the whole super industry being undertaken.
In addition, trustees can prepare for the changes by making sure they have their SMSF bank details up to date with the ATO. They will also need to ensure they have an Electronic Service Address (ESA) for their fund and this is also updated with the ATO. Even if you haven’t needed to use it, most funds will already have an ESA, particularly those that use dedicated SMSF accounting software. If you’re unsure of your fund’s ESA contact your accountant/administration service provider.
The last bit of information needed for an SMSF to be SuperStream ready is a Unique Superannuation Identifier (USI). For an SMSF, this is simply their Australian Business Number (ABN).
Many fund trustees will already have some experience with SuperStream and the need for an ESA as employer contributions from non-related parties should have been made via this system for some time now. These changes are likely to see a larger number of funds being impacted and needing to be aware of the SuperStream requirements. As an example; once the domain for receiving employer contributions, going forward, it will be important for newly established funds to have their ESA and bank details recorded with the ATO before members attempt to arrange any rollovers to the fund. At the other end of the spectrum, those looking to wind their fund up and transfer their benefits to an APRA fund will also need to adhere to the SuperStream requirements when rolling those benefits out.
Expect to hear more from us over the coming months as we get closer to the compulsory start date.
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