Changes to Rules in relation to Employee Superannuation Fund Choice
Rules around superannuation compliance when onboarding new employees will change from 1 November 2021. 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:
- Log into ATO online services
- Enter the employee’s details, including:
- TFN – an exemption code can be entered where an employee cannot provide their TFN, but this could result in processing delays
- Full name – including ‘other given name’ if known
- Date of birth
- 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:
- An employee doesn’t choose a super fund, and
- 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.
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