Changes to Rules in relation to Employee Superannuation Fund Choice

 

Rules around superannuation compliance when onboarding new employees will change from 1 November 2001. Employers will need to undertake an extra step explained below. Failing to meet the requirements may incur penalties.

The current ruling states that when onboarding new employees, employers can add them to their default superannuation fund if the employee has not chosen a superannuation fund. Going forward, for any new employees starting from 1 November 2021, employers will be required to contact the Australian Taxation Office (ATO) if the employee has not chosen a fund and check whether the employee has a “stapled fund”. A stapled super fund is an existing super account which is linked, or ‘stapled’, to an individual employee so that it follows them as they change jobs. If the employee has a stapled fund, the employer will need to make contributions to that fund as opposed to the employer’s default superannuation fund.

These provisions were enacted to prevent individuals from have multiple superannuation funds and to reduce fees associated with setting up new funds each time an employee changes job.

Employers will need to use the ATO’s online services and request their employee’s stapled super fund after they have submitted a Tax file number declaration or Single Touch Payroll pay event. To request a stapled super fund, the employer (or their authorised representative) will need to:

  1. Log into ATO online services

  2. Enter the employee’s details, including:

  3. TFN – an exemption code can be entered where an employee cannot provide their TFN, but this could result in processing delays

  4. Full name – including ‘other given name’ if known

  5. Date of birth

  6. Address (residential or postal), if TFN not given

It is expected that employers will receive the stapled fund details within minutes and the ATO will notify the employee of the stapled super fund request and the fund details provided to them. Bulk requests can be made to the ATO for up to 100 new employees at once.

When to use default funds going forward?

From 1 November 2021, employers can only pay superannuation guarantee contributions into their default fund, or another fund that meets the choice of fund rules only if:

  1. An employee doesn’t choose a super fund, and

  2. The ATO has advised them that they don’t have a stapled super fund.

If you have any questions in relation to above, please do not hesitate to contact one of your trusted advisors at Cordner Advisory on 07 5504 5700.

Cordner Advisory - Your Business Advisory, Accounting & Tax Specialists. Catering for clients all across Australia, from the golden beaches of the Gold Coast and Sunshine Coast to the capital cities such as Brisbane, Sydney and Melbourne

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Seeking understanding on the changes to Employee Superannuation Fund Choice rules? Engage with a Cordner Advisory Broadbeach, Gold Coast expert today. Reach out to us here.

 
Kamil Qureshi - Consultant

Kamil is a Bachelor of Commerce graduate and is a qualified Accountant with multiple years of experience in Australia’s top 10 Chartered Accounting firms. He is currently studying towards his CPA. Kamil specializes in business advisory and has a sound knowledge of Australian Taxation Law.

He has been advising and assisting many small to medium businesses across a range of industries. He works with a positive attitude and puts his clients’ needs first and provides assistance in any way he can. He enjoys the challenge of researching complex matters and has assisted many clients to find optimum solutions for their business’s taxation issues. Being multi lingual, Kamil has been a resourceful asset to the firm when it comes to engaging with our clients from overseas.

https://cordner.com.au/team/kamil-qureshi
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