Over the past year, we’ve seen numerous developments in the Self-Managed Super Fund space. The recent passing of legislation has increased the limit of SMSF members from 4 to 6, extended the bring-forward age and many more changes outlined in our article on the New Laws For Australian SMSFs And Superannuation Funds.
The ATO has also recently communicated updates surrounding the importance of using a unique bank account for your SMSF, meaning that you must have a bank account in your fund’s name to manage the fund’s operations and accept contributions, rollovers of super and income from investments.
And from October of this year, we’ll see the mandatory roll-out of SuperStream for eligible SMSFs. In this article, we deep-dive into why your SMSF needs a unique bank account, and what exactly SuperStream is.
What is SuperStream?
Superstream is the way in which businesses are required to pay their employee superannuation contributions. SuperStream is a fully electronic process that sends and receives employer contributions and any associated data, and is predicted to streamline the superannuation process as we know it.
Who is eligible to use SuperStream?
SuperStream must be used by:
- APRA-regulated superannuation funds
What does an SMSF need in order to use SuperStream?
In order for an SMSF to utilise the SuperStream service, it will need:
An Australian Business Number
If your SMSF doesn’t already have an ABN, you must apply for one before the SuperStream roll-out on 1 October 2021. Otherwise, you will be unable to rollover funds to or from your SMSF.
An Electronic Service Address
An ESA is the tool that facilitates the SuperStream rollover service. If you don’t have an ESA by 1 October 2021, you will be unable to rollover funds to or from your SMSF. Clients of the BlueRock SMSF service are administered on Class Super as such they utilise the smsfdataflow ESA.
You will need to ensure that your SMSF details are up to date and accurate. This includes reporting the unique bank account of the SMSF to the ATO (where appropriate), and updating your ABN and ESA details.
When do you need to utilise SuperStream?
You are only required to use superstream under the following circumstances:
- Your SMSF receives contributions from your employers
- The contributions you receive are from a related-party employer
Please note if you are an employee of your family business and your super guarantee contributions go to your SMSF, these contributions are exempt from the SuperStream standard.
SuperStream is not applicable to members who make their own personal contributions.
What are the benefits of SuperStream?
Along with streamlining the superannuation process, there are many additional benefits to the SuperStream process:
- More timely and reliable payments
- Significant reductions in data errors
- Efficient flow of information regarding contributions
- Rollovers themselves are not only processed faster, but also more accurately and with fewer errors
- Elimination of postal delays, meaning that your super money can be released faster
- SuperStream also keeps an electronic record of all of your contributions in order to support any of your tax obligations (such as your annual SMSF return)
Using a unique bank account for your SMSF
If you have a Self-Managed Super Fund, it’s your responsibility to ensure that you have a bank account in your fund’s name. This bank account must be separate from any of your existing accounts (and any related employers accounts).
Why do you need a unique bank account for your SMSF?
The ATO recently issued letters to all trustees of SMSFs who do not have unique bank accounts linked to their funds. You now need a unique bank account in order to:
- Accept contributions
- Accept super rollovers
- Manage the fund from an operational perspective
- Accept any income made from investments
If you have been issued a letter, you must update your SMSF’s bank account in order to rectify the situation.
Next Steps for Using SuperStream and Your SMSF Bank Account
You can begin using SuperStream as soon as your ESA provider makes the transition. We recommend preparing yourself early so you can begin using SuperStream as soon as it becomes available to you. However, you must be SuperStream ready by 1 October 2021. If you aren’t SuperStream ready by this date, then APRA-regulated super funds won’t be able to process your rollover request.
Similarly, if you fail to update your SMSF to a unique bank account, you will be placed at risk of being unable to roll money both in and out of your SMSF. You also face the possibility of losing any associated retirement benefits.
Our team of SMSF advisors are here to get you SuperStream ready, and help you manage SuperStream rollovers. To get started, reach out to one of our leading Melbourne-based financial advisors for an obligation-free chat.