Login

You are currently on:

SuperStream V3.0 – dealing with SMSF rollovers and release authorities

Sep 3, 2021, 15:22 PM
By Anthony Cullen
Senior SMSF Technical Specialist


Anthony-Cullen_90x90mmWith the impending SuperStream changes I recently wrote a piece on what trustees need to consider in preparation for 1 October 2021. You can find that article here.  Following on from this, I want to now explore some of the practical aspects of adhering to the SuperStream requirements.


Requesting a rollover

Whether you are rolling in or out of an SMSF, the member must initially make a request for the rollover to occur.  The request can be made with either the transferring or the receiving fund, and in many cases will start with the ATO via the member’s MyGov account.  

An Electronic Portability Form (EPF) can be lodged with the ATO via the member’s MyGov account. The ATO will verify the member’s identity and membership details before sending the rollover request to the transferring fund.

Alternatively, paper requests can be lodged directly with either fund involved in the process using an ATO approved form (NAT 75359). Before a rollover can occur, the trustees will need to engage in a verification process (more on this later).

The options mentioned above are only designed to deal with ‘whole of balance’ rollovers. For partial rollovers, the member must contact the fund directly to determined what the process is. Attending to the actual rollover will still occur in accordance with SuperStream.

Other exceptions to SuperStream include, but are not limited to, in-specie transfers, internal rollovers and amendments or cancellations to rollovers already requested.

Member verification

As mentioned above, there are certain checks and balances included within the SuperStream system that will need to be attended to prior to a rollover being made.

Where payments are being made to an SMSF (regardless of whether the transferring fund is an APRA fund or SMSF) the transferring fund must use the SMSF Verification Service (SVS) available via the Standard Business Reporting platform to verify certain information, such as:

• The receiving fund’s complying status
• That the TFN of the individual is associated with the SMSF
         i.e. if they are recorded as a member
• The SMSF bank details recorded with the ATO
• The SMSFs Electronic Service Address (ESA)

Using the SVS will trigger an ATO alert to the relevant member.  If they have requested the rollover there is nothing for the member to do. However, if they have not instigated the rollover, they may want to contact their existing fund to investigate further.

Verification of details related to transfers from SMSFs to APRA funds will occur is a similar fashion.  They will be via the Fund Validation Service (FVS), also run through the Standard Business Reporting platform.  This is designed to check similar and necessary information connect to the receiving fund in order to process the rollover.

In addition to these checks, the SMSF member’s TFN must also be validated with the ATO prior to the rollover occurring.  Although this is also done through the Standard Business Reporting platform, it is a different process to the above which is more about verifying the receiving fund details.

SMSF trustees will need to engage the SMSF Member TFN Integrity Check Service, otherwise known as SMSFmemberTick.  This process is required, even though many will argue that the member and trustee are one in the same person and they should know their own TFN details. 

These processes will help enhance protection of member interests and reduce the possibility of fraud and illegal early access. These steps can only be processed through digital service providers, such as SuperMate, that are SuperStream ready. Most trustees and advisers are unlikely to have access to such programs.  The majority of accountants and administrations who use dedicated software programs will be in a position to assist with these steps. Historically, the earlier stages of preparing for a rollover did not involve much input from accountants and administrator (other than possibly getting the fund accounts up to date).  Going forward they will need to be more heavily involved in the process from an earlier stage.


Release authorities

The ATO will use SuperStream to issue release authorities to SMSFs that are SuperStream ready.  This will include any fund that has it accounts prepared in a dedicated software program that is SuperStream compliant.  Funds that are not SuperStream ready will continue to receive release authorities via the current method.

Release authorities that will be covered are:

• First homeowner’s super saver scheme
• Excess concessional and non-concessional contributions
• Excess non-concessional contribution tax
• Division 293 

There will be no change to how the ATO issue the initial determinations to members/individuals.

Timeframes

Superannuation Industry (Supervision) Regulations (SISR) require trustees to rollover benefits as soon as practicable, but not later than three days from:

• Receiving the request or
• Receiving further information requested

Trustees have five business days to request any missing information relating to a rollover request.  Although, they will need to determine if there is missing information earlier than that, as they will need to attend to the rollover within three days if the request is complete.  Such missing information may relate to the member and/or the rollover details.

There are also timeframes for members to supply requested missing information that if not met can result in the trustee cancelling the rollover request application.

These timeframes will be applicable to SMSFs as well as APRA funds from 1 October 2021.

For your typical annual SMSF client that only has their records updated once a year, consideration needs to be given to when a member may request a rollover out of the fund. Otherwise, the member may find that they have put themselves, in their capacity of trustee, in a position that they cannot comply with the strict timeframes. 

The reason being is that not having the fund records up to date, and needing information to process the accounts, does not constitute ‘missing information’ in a SuperStream context as discussed above. 

Release Authorities must be attended to within 10 days which for SMSFs is a shorter timeframe than previously available.

SuperStream is about the transfer of benefits and data between funds and/or the ATO. It does not replace any requirement to supply information to the member i.e. a copy of the Rollover Benefit Statement. 

Transferring benefits & making payments

Payments of any money via SuperStream must occur via electronic transfer and, as such, trustees will no longer be able to arrange a cheque to be sent to the receiving fund or ATO.  The payment itself does not form part of the SuperStream message/data that is sent between funds and/or the ATO. 

However, before a trustee can arrange the transfer, they will need to obtain a payment reference number that will be generated by the SuperStream enabled software.  This payment reference number will need to be included in the details of the transfer and will then be matched to the data transfer that occurs via SuperStream.

This will require greater co-ordination and collaboration between trustees/advisers and accountants/administrators as the former will generally tend to the actual payment, but it will often be the latter that has access to the software to generate the reference number and to transfer the necessary data.  In addition, the payment and the data should be provided to the receiving fund on the same day.

To put this into some perspective, consider what may be involved in winding up a fund in late June and the need to get the benefits rolled over to the receiving fund prior to the end of the financial year.  Previously, it wasn’t uncommon for the trustee/adviser to arrange the sell down of the assets and the transfer of the cash, potentially leaving a small balance to cover any outstanding fees and taxes.  The accountant/administrator would then supply the rollover benefit statement sometime after once the accounts were up to date.

These previous practices will not be able to occur under the new requirements of SuperStream. Firstly, as the transfer is likely to be a partial rollover, the standard process form cannot be used.  The payment and data then need to be coordinated so that they occur at the same time.  While the industry gets used to the new norm it may be prudent to factor in a greater amount of time for the process to play out.

One benefit that does come from this process is that the receiving fund must respond and confirm the receipt of the payment and data.  This will assist with providing evidence that the transfer occurred and that the money has not left the superannuation system (where it was still preserved) for audit purposes. 

One final thought

Adherence to SuperStream requirements will be covered by the operating standards under superannuation law. Breaches may result in penalties being raised against the trustees. The ATO have noted that they expect auditors to check for compliance with the SuperStream provisions.

Conclusion

Cash rollovers to and from an SMSF from 1 October 2021 must be in accordance with the SuperStream payment standards.  It is one thing to be SuperStream ready, it is another thing to be prepared for, and understand the changes this is going to have on the SMSF industry. Understanding the whole process, the short timeframes and parties that need to be involved is important.  Coordination and collaboration between various parties is going to be key.  

Want more free knowledge?

To hear more about SuperStream follow our podcast SMSF Adventures with SuperConcepts hosted by Jessica Griffith and tune in for next week's episode with Anthony Cullen - "Roll in, roll out and roll up with SuperStream."

Follow the show on Spotify or Apple Podcast for more free knowledge as we bring you the latest SMSF updates every fortnight. 

To learn more about how our range of SMSF services phone us on 1300 023 170 or request a call back

Alternatively click through to view our range of services for trustees, accountants and advisers