Currently the SIS Regulations allows for all super funds, other than SMSFs to provide data to regulators and transfer payments between funds using the secure electronic payment and data verification system known as SuperStream. For SMSFs currently, it requires the processing of rollovers manually and often involve multiple interactions between the SMSF member at current APRA fund(s). According to the ATO, there are about 65,000 rollovers to SMSFs completed annually, thereby resulting in higher administrative costs on both the APRA fund and SMSFs.
The principal purpose of these new measures is to amend the SISR 1994 to extend the operation of SuperStream to cover SMSFs from 30 November 2019. These draft regulations have now been tabled in parliament and importantly clarifies when SMSFs are required to enter the system.
Following the period of consultation, SMSFs will now only need to obtain a digital address and provide it to the ATO if it receives a contribution (other than from a member or a related part employer), a rollover, or transfer of a member’s withdrawal benefit.
Referring to comments made by the Head of Policy of the SMSF Association, Jordan George, “As a consequence, SMSFs no longer receiving rollovers or employer contributions will not have to enter the SuperStream system just because they receive a once-off, non-concessional or member-related contribution. If non-concessional contributions did fall into the remit of the SuperStream regulations, it had the potential to create a compliance burden for SMSF trustees, especially for older and established SMSFs that don’t receive employer contributions and have no real need for SuperStream. Typically, these SMSFs just receive contributions directly from the member.”
In a speech recently made at the CAANZ SMSF Conference, Deputy Commissioner, Superannuation, ATO – James O’Halloran noted that this outcome “will improve the quality of data and the timeliness of rollovers and reduce processing time, making it more consistent with the APRA rollover data standard. In essence it will align with the current APRA SuperStream standard for rolling over super accounts, within three days of initiation, reducing manual interactions and repeat engagements between SMSFs and APRA funds. As a result, trustees will experience greater ease in rolling over accounts through the ATO’s online portability tool and faster allocation of monies.”
SMSF Verification Service (SVS)
To help protect against concerns of possible identity theft and possible fraud, the ATO has been consulting with industry to look at the design of the SMSF Verification Service (SVS) to allow APRA funds to electronicaly verify an SMSF and trustee or member before a rollover occurs. APRA funds however wont’ be able to solely rely on SVS to meet their ‘know you client’ obligations. For anti-money laundering (AML) purposes, the Fund will still be required to use current processes and procedures in order to satisfy the trustee obligations.