By Olivia Long
You have been given a 12-month reprieve. But the deadline is now fast approaching. From 1 July, SuperStream comes roaring to life – the new payment system that demands employers make their superannuation contributions electronically to SMSFs. At this stage, it will only apply to medium or large-sized companies, with smaller companies (less than 20 employees) having another 12 months’ grace.

So what’s involved? Actually, quite a bit. For employees who are trustees, they have to give their employer their electronic service address, SMSF bank account details and Australian Business Number. And, no, not on 29 June; it needs to be done now.

In practice, that means by the end of May at the latest, because although we live a computerised world, the reality is it usually takes payroll departments about a month to update information, especially in larger companies. And that is probably being generous.

According to the Australian Taxation Office (ATO), about 60% of SMSFs have taken the necessary steps to become compliant – but that still leaves a hefty number who have not got their act together.

If trustees fail to do so, the consequences are quite simple – the money ends up in the employer’s default fund, the opposite of what people aim to achieve when they set up an SMSF – being self-reliant by having full control over their retirement income savings. [Trustees will be able to roll over super money that has gone into a default fund but it will be time-consuming exercise. Far better to get it right in the first place.]

In addition, there is also the potential for penalties for trustees who are non-compliant after 30 June, including a $3400 administrative penalty. Ouch!

There should be no issue with trustees providing their employer with their bank account details and Australian Business Number, but there could be some confusion around the electronic service address.

These addresses can only be obtained from SMSF service providers and trustees will need to sign up with one of them as soon as possible to obtain it.

It’s not difficult. The ATO website has a list and it’s a simple, one-off procedure.

For trustees who have not had any problems with their employment payments in the past, this might all seem like unnecessary red tape. The old “if it ain’t broke, don’t fix it” adage.

Normally, I would have a lot of sympathy with this attitude – anyone in this industry knows just how much red tape we have to deal with.

But in this instance I have some sympathy with the regulator – and for this reason.

Just think of the numbers. There are now more than one million trustees and members in more than half a million SMSFs; it is a mammoth regulatory task and one, I suspect, that can only be handled by the ATO. [Calls by other industry superannuation sectors for SMSFs to come under the jurisdiction of APRA are nonsense on this numerical basis alone – but that’s another article.]

What it means is that it will be far easier for the ATO to monitor that very small percentage of employers who do not do the right thing by their employees/trustees and fail to make their regular superannuation payments.

The ATO says it will make it far easier to oversee the system, and on this occasion I am in their corner.

So what are you waiting for – get compliant now.