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.
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.
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.
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.
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.
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.
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