Changes to Superannuation Rules for Employers

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Insights From MCA Accountants

Changes to Superannuation Rules for Employers

Action Points

From 1 November 2021, when an employer takes on a new staff member, they may be required to ask the ATO if they have a “stapled” superannuation fund that they should make future contributions to.

Key Links

THE CHANGES

From 1 November 2021, when an employer takes on a new staff member they will be required to follow an updated process with regards to superannuation:

  • Provide a “superannuation choice” form to the employee and pay superannuation to the fund of that persons choice;
  • If no choice is made, ask the ATO if the employee has a “stapled” superannuation fund (basically ask the ATO if they currently have a superannuation fund);
  • Only if neither of the above two occur, then they employer is required to pay superannuation into their default fund (i.e. the employer will set up an account for the employee).

THE PROBLEM THESE CHANGES OVERCOME

Historically, when a person starts new employment in many cases the employer would create a new superannuation account for that person in their “default fund”. This would normally be for one of two reasons:

  • The person did not notify the employer of their existing superannuation fund details; or
  • There is an industry agreement or state award that dictates which superannuation fund contributions must be paid to.

It is therefore common for a person to have multiple superannuation accounts, each with small balances incurring their own set of fees and ultimately the only winner in this scenario are the superannuation funds receiving those fees. In addition, it is common for these superannuation accounts to be forgotten about and “lost” (which end up being paid to the ATO).

HOW TO REQUEST A PERSON'S STAPLED SUPER FUND

Requests for a person’s stapled super fund must be made via the ATO’s Online Services. If you are unsure how to access this, please have a read of our insights article on setting up your access at https://www.mcaaccountants.com.au/resources/insights/ato-online-services/.

This is another example of the ATO moving to “digital by default” and we strongly encourage everyone to set up access to their ATO online accounts.

In order to make the request, you will need to have your employee’s Tax File Number (TFN), date of birth, full name, and address. You should have collected this information from them upon starting their employment on a Tax File Number Declaration form (which you can obtain from https://www.ato.gov.au/Forms/TFN-declaration/).

MORE INFORMATION

The ATO website is a good source of information for employers unsure of what their obligations are or how to fulfill them. Those unsure should start at the ATO’s setting up super for your business webpage.

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