SuperStream is a system developed by the Australian Tax Office (ATO) that requires employers to send all superannuation payments and employee information electronically. Using SuperStream will be mandatory for all businesses from 1 July 2016. For medium to large employers (greater than 19 employees), the deadline was October 31, 2015. For small businesses, the deadline is June 30, 2016.
More than 65 percent of small businesses are already using SuperStream. According to the ATO, the online system has cut time spent on super processing by around 70 per cent each cycle for employers. It’s primary benefit is that it simplifies the process for employers making super contributions on behalf of their employees. For employees, this means a faster allocation of super contributions to their accounts, and a reduced number of lost accounts.
Transitioning to SuperStream
The ATO has made it easy for how businesses transition and become SuperStream ready. For businesses already using online or cloud-based book-keeping platforms, the transition will not be complicated. Options provided by the ATO include using:
- A payroll system that meets the standard – payroll systems need to cover both data and payments. Payments must be electronic either through electronic fund transfer or BPAY;
- A super fund’s online system – most large super funds have online payment services that employers can use;
- A messaging portal – a portal that converts contribution data to a SuperStream compliant format;
- A super clearing house similar to the ATO’s Small Business Super Clearing House (SBSCH). The SBSCH is a free service for a small business with 19 or fewer employees or businesses with an aggregated annual turnover of $2 million or less.
If you run a business and are unsure where to start, your default super fund should be your first port of call. They are likely to have an existing SuperStream-compliant clearing house service. Existing accounting software should also be SuperStream ready. Cloud-based solutions such as Xero are already SuperStream certified.
Collection of Information
Employers are also required to collect new information from their employees to be SuperStream compliant. This information, once collected, must be entered into a system that complies with the new changes. Moreover, this additional information needs only to be collected from current and new employees.
This new information includes the Employee’s Tax File Number (TFN), their super fund ABN and their unique superannuation identifier (USI). If employees have a self-managed super fund, known as an SMSF, they will need to provide the employer with their TFN, fund ABN, bank account details and electronic service address. To comply with SuperStream, all regulated superannuation funds must have a unique superannuation identifier (USI), replacing SPIN (super product identifier number).
Businesses with nineteen or fewer employees have until the end of June 2016 to comply with the Australian Tax Office’s SuperStream system. As SuperStream is mandatory for SMEs, non-compliance can result in penalties from the ATO. If you have any questions about upcoming tax changes, contact your accountant or bookkeeper. The Australian Tax Office is also on hand to assist with the transition.