The Federal Government has changed to the way employer superannuation contributions are made to all super funds from 1 July 2014 for large employers and a year later for smaller firms.
However, SMSF clients employed in businesses with more than 20 staff should comply with the new SuperStream reforms by this July to avoid employers refusing to continue paying contributions to their SMSF and redirecting them to the employer’s default super fund instead.
The key change is that funds need to receive both employer super contribution payments and the related messages electronically, using government-specified formats with the aim of reducing administration time for trustees.
Funds that fail to comply will be unable to receive contributions, including superannuation guarantee (SG) payments and salary sacrifice amounts, from businesses that employ their members.
What should you do by 31 May 2014?
Employed members of SMSFs should supply three key pieces of data to their employer by 31 May 2014:
- Your fund's Australian Business Number (ABN)
- Your fund’s bank account details: Bank name, BSB and account number, and
- an electronic service address for receiving data messages about the contributions
Where do you get your electronic message service address?
SMSFs need to engage a service provider to comply as the electronic service address is more than just an email address - 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.
For clients using Macquarie Bank as their cash hub:
- your free electronic service address is MACQUARIESMSF.
- A letter with more detail will be sent by Macquarie soon, if not already received.
Any clients not banking with Macquarie can either:
- sign up with Australia Post for $25pa before 31 May 2014
- or, make use of our Lockwood and Ward service with our partner BGL.
For strategic advice about running your SMSF, including making use of the new contribution limits, please call our Partner – Wealth Consulting, Michael Rees-Evans; for help with SMSF administration and compliance please call our SMSF Manager, Sandy He – both on 02 9299 7044.