SMSF trustees must have ESA
Self-managed superannuation fund (SMSF) trustees need to ensure their fund is compliant with SuperStream, or risk having their Super Guarantee contributions flow into a default fund.
With small employers entering the SuperStream system in 2015-16, SMSF Association director of technical and professional standards, Graeme Colley, said there would be an increase in the number of employers contributing to SMSFs, with the likelihood of a rise in the number of inactive ESAs being identified.
"The Australian Taxation Office estimates about five per cent of all SMSF trustees who are employees don't have an active ESA and they run the real risk of having their SG contributions going into a default super fund," he said.
"Although five per cent seems a small percentage, when it's considered about 300,000 funds receive employer contributions, then it means about 15,000 funds don't have an active ESA — a sizeable number."
Colley said in many cases issues would stem from trustees being unaware that they had not correctly linked their fund to the messaging provider.
"Remember, too, that if an SMSF trustee provides an ESA to their employer and the messaging provider is not expecting a contribution message for this SMSF, it will be rejected. The employer will receive an error message and is required by law to obtain the correct information from the SMSF," he said.
"Where this occurs, the employer should ask their employee to complete a Choice of Super Fund Form that mandates the provision of both ESA and bank account details - information the employer needs to be able to send contributions electronically.
"If, after 28 days, the employee does not provide a completed standard choice form to them, the employee can instead make the super contributions to their default super fund."
Colley said to be SuperStream compliant, SMSF members need to provide bank account details, an Australian Business Number and an ESA to their employer.
AUTHOR
Nicholas O'Donoghue
Recommended for you
The second tranche of DBFO reforms has received strong support from superannuation funds and insurers, with a new class of advisers aimed to support Australians with their retirement planning.
The financial services technology firm has officially launched its digital advice and education solution for superannuation funds and other industry players.
The ETF provider has flagged a number of developments as it formally enters the superannuation space through a major acquisition.
While all MySuper products successfully passed the latest performance test, trustee-directed products encountered difficulties.
