The Association’s Director of Technical and Professional Standards, Graeme Colley, said it was “imperative” for SMSFs to have an active Electronic Service Address to comply with SuperStream.
SuperStream is a new electronic system for transferring information about superannuation contributions between employers and super funds. Large employers should already be using SuperStream, and small employers are currently in a transition period. It should be noted that not all SMSFs will need to use SuperStream. SMSFs that are required to use SuperStream were meant to be ready from 3 November 2014.
“The Australian Tax Office estimates about five per cent of all SMSF trustees who are employees don’t have an active ESA [Electronic Service Address], and they run the real risk of having their SG contributions going to a default super fund,” Mr Colley 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.”
“It’s also worth noting that as small employers enter the SuperStream system in 2015-16, there will be an increase in the number of employer contributions to SMSFs and, in all likelihood, an increase in the number of ESAs not active.”
Mr Colley said in “most cases” of inactive ESAs the SMSF trustees are unaware they hadn’t correctly linked their fund to the SMSF messaging provider, who transmits the contribution information between the employer and super fund.
The ATO has had to point out that an Electronic Service Address is not an email address.
“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,” said Mr Colley.
“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.”
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