SMSFs and SUPERStream - At a glance

One concrete outcome from the Cooper Super Review is the delightful “SUPERStream”.  In very basic terms, SUPERStream is an electronic payment system for contributions to superannuation funds and also for benefit rollovers/transfers between super funds.  Both contributions/benefit rollovers and the superannuation data applying to each will be transferred electronically.  

How does SUPERStream apply to SMSFs and can SMSFs live off the grid in relation to SUPERSteam?  And what is the significance of 1 July 2015?  Essentially, SUPERStream will apply to SMSFs as from 1 July 2015 in the following ways:

Contributions

Member contributions are not caught by SUPERStream.

Third party contributions (such as a husband for a wife, or a parent for a child under age 18) are also not caught by SUPERStream.

However, Employer contributions will (subject to one exception) be caught by SUPERStream.  The exception applies to contributions from related party employers.

What is a related party employer?  Simply an employer which is a standard employer sponsor of the SMSF.  For an employer to be a standard employer sponsor it must have an arrangement between itself and the trustee of the SMSF as to the contributions it will make to the SMSF.  It would be best to reduce the arrangement to writing signed by both employer and the trustee.  There is no official name for such an arrangement – it could be called an “SMSF contributions agreement”.

The employer need not be controlled by the members of the SMSF in order to qualify as a related party employer.  The only required relationship between the employer and the SMSF is that there is an arrangement as to the contributions to be made by the employer for employees who are members of the fund.

Curiously, even if the employer is controlled by the members, it will not qualify as a standard employer sponsor unless and until there is a “SMSF contributions agreement” in place.

Benefit rollovers/transfers

SMSF to SMSF rollovers/transfers are not caught by SUPERStream.

APRA regulated fund to SMSF rollovers/transfers are also not caught by SUPERStream.

SMSF to APRA regulated fund rollovers/transfers are caught by SUPERStream.

APRA regulated fund to APRA regulated fund are caught by SUPERStream.

Whether rollovers/transfers are, or are not, caught by SUPERStream seems to be the SUPERStream status of the receiving fund.

As SMSFs are not subject to SUPERStream, benefit rollovers and transfers to SMSFs are not caught.

However, as APRA regulated funds are subject to SUPERStream, benefit rollovers and transfers to APRA regulated funds are caught.  In this case, it is the APRA Regulated fund which must be SUPERStream compliant.

Benefit payments

Benefit payments (whether pension or lump sum) are not caught by SUPERStream.