Do you employ 20 or more employees or are you an employee of a business with 20 or more employees and have an SMSF? If so then read on.
Changes from 1 July 2014
From 1 July this year it will be compulsory for employers with 20 or more employees (large employers) to pay contributions to SMSFs electronically. It is estimated that there are about 150,000 SMSFs that are impacted. From 1 July 2015 it will be necessary for all employers (including small employers with 19 or less employees) to make contributions electronically. In both cases there is an exception to the rules where contributions are made to funds for ‘related parties’ of the employer. This is expected to remove around 25% of SMSFs from having to comply with the rules.
Under the new rules SMSFs will be required to receive contributions using an ecommerce standard so that contributions can be received by direct credit or BPay and the contribution data message is received electronically via a nominated electronic address.
There are three pieces of information that an employer must have by 31 May 2014 if contributions are to be made to the fund from 1 July. These are:
- The fund’s Australian Business Number (ABN);
- Confirmation of the fund’s bank account details; and
- An electronic service address.
Nearly all SMSFs have an ABN and a suitable bank account to receive the contributions. However, all SMSFs that wish to receive employer contributions under the new rules will be required to have access to an electronic service address which can be obtained via a range of service providers. A register of the service providers can be obtained from the ATO or your SMSF professional can help you to locate them. If you are currently using an administration service for your SMSF the administrator will understand what is required to access the electronic service address and may have already let you known what is happening. The electronic service address from providers is either free or at a low cost to the fund.
If you are a large employer, that is an employer with 20 or more employees, it is expected that payroll systems will need to be updated to include the additional information by the required time to enable contributions to be made to the SMSF. The ATO is currently updating the Election of Superannuation Fund choice form so that contributions can be made by employers to the nominated SMSF.
Please contact us as soon as possible so that we can ensure that your fund will be ready for the change on 1 July this year and your employer contributions from ‘large’ employers continue to be made to your SMSF without any interruption.
Greg Major is a director of Blueprint Wealth.
Blueprint Planning Pty Ltd ABN 78 097 264 554 trading as Blueprint Wealth and Greg Major are Authorised Representatives and Credit Representatives of AMP Financial Planning Pty Limited ABN 89 051 208 327 Australian Financial Services Licence 232706 and Australian Credit Licence 232706
Disclaimer: Sourced from SPAA Important Changes for Employers Contributing to SMSFs from 1 July 2014. This article contains general information only. It does not take into account your objectives, financial situation or needs. Please consider the appropriateness of the information in light of your personal circumstances.