The federal government’s SuperStream superannuation reform changes commence this week and while there is a one to two-year transition period, depending on the size of your business, the Australian Tax Office is encouraging HR practitioners to get ready for the system early.
ATO statistics state that more than 800,000 Australian employers make regular superannuation contributions on behalf of their employees. However, in the current system, employers often have to manage contributions to multiple super funds, each with their own process.
To deal with this, the Australian government has introduced a new mandated ‘SuperStream’ standard for the super industry and employers. The introduction of SuperStream, to be implemented by most businesses by 30 June 2015, will create a standardised system for employers, ensuring all contributions are made electronically with linked data and payments.
Put simply, all super contributions will be treated in the same way – whether sent to a default or choice fund, an APRA fund or self-managed superannuation fund.
Benefits for employers
SuperStream takes advantage of well-established electronic payment systems in the banking sector and proven internet technologies to move member’s information and their super to the right destination quickly.
The core benefits include:
- A more efficient and consistent system to process super contributions.
- A reduction of errors in data and employee information.
- A reduction of costs associated with managing super contributions.
- A simplification of the back office function (no more complicated spreadsheets and add-on systems).
- Adaptable payroll systems able to generate employee superannuation information easily.
By keeping administrative costs down and ensuring the money gets to the right account efficiently, more savings will flow to working Australians in their retirement. These savings are estimated to amount to the equivalent of around $40,000 extra in super per person over a working life.
There are multiple solutions in the market for making SuperStream contributions and HR practitioners should look for a solution that best suits their specific requirements.
Solutions may include:
- Upgrading payroll software.
- Using an outsourced payroll or other service provider.
- Using a commercial clearing house or, for employers with 19 or fewer employers, using the free Small Business Superannuation Clearing House.
- Using your organisation’s default fund, which may also have an existing electronic channel it manages or can make transitional arrangements for you.
Key dates to remember
Some service providers will be in a position to transition employers, of any size, from July 2014, but the ATO expects most employers will undertake implementation between July to December.
All large employers must complete implementation by no later than 30 June 2015.
Small employers (those with 19 or fewer employees) have another year, starting from 1 July 2015 but must complete their implementation by no later than 30 June 2016.
While the ATO will be focused on providing education and support during the period of transitioning to the new standard, there will be flexibility for employers making a genuine attempt to implement SuperStream.
This can be demonstrated practically by having a firm start date and implementation plan with a service provider or default fund.
For more information about the implementation process, specific service providers who are developing SuperStream solutions and a detailed checklist for employers, visit the ATO website.