iscover ATO clears up common payday super myths for SMSFs
SuperThe Tax Office has warned SMSFs about some of the preparations they need to make now ahead of the start of Payday Super.
The ATO has sought to clear up some of the common myths about Payday Super and SMSFs before the beginning of the new regime in July.
One of the biggest misconceptions among SMSFs is that there is nothing they need to do before the start date of Payday Super, the ATO said.
With employers making super contributions more frequently under Payday Super, the ATO said it is critical that SMSFs are set up correctly to ensure they can receive contributions.
"Make sure you have SuperStream arrangements in place for unrelated employers, ensuring contributions are able to be sent electronically using the correct data and payment formats," said the Tax Office.
"Under Payday Super, employers must be able to send contributions with each pay run. To enable this, your SMSF must be set up and ready to receive contributions."
The ATO said this means that SMSFs must have an active electronic service address and correct and up to date member and fund details.
"All fund and member details need to match, otherwise contributions may be rejected or delayed, creating compliance issues for employers and extra work for your SMSF,' it said.
Another myth, the ATO said, is that Payday Super only affects big super funds.
"Even though most SMSFs don’t process high volumes of contributions, they still need to comply with Payday Super and SuperStream changes for unrelated employers," the ATO said.
"Under the SuperStream upgrades, additional checks are being introduced including new error messages and a member verification request that confirms your ESA is active.
Employers will need this confirmation before they can make a contribution to your SMSF or continue making contributions. If your SMSF isn’t set up correctly, payments may be stopped."
The Tax Office also urged SMSF members to check that the details of their fund are accurate and up to date.
"With tighter processing timeframes, super funds and SMSFs will need to identify and return incorrect payments faster so employers meet their obligations," the ATO said.
"All SMSFs should consider how they can speed up allocation and processing to assist employers in being compliant where an error occurs."
The ATO also warned that SMSFs that if contributions are rejected due to incorrect SMSF details, employers may face compliance risks, and trustees may experience delays in receiving super.
"Act now to make sure you’re ready to receive more frequent contributions for a smoother changeover to Payday Super," it said.
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Miranda Brownlee
Miranda Brownlee is the editor of Accountants Daily and Accounting Times, the leading sources of news, insight, and educational content for professionals in the accounting sector.
Miranda has over a decade of experience reporting on the financial services and accounting sectors, working on a range of publications including SMSF Adviser, Investor Daily and ifa.