From 1 November 2021, if you have new employees start and they don’t choose a superannuation fund, you may have an extra step to take to comply with the choice of fund rules. You may need to request their ‘stapled superannuation fund’ details from the ATO.
If you are an employer, here is everything you need to know about the new rules. The ATO has also published a handy Reference guide for employers, which summarises the new rules.
What is a stapled superannuation fund?
A stapled superannuation fund is an existing superannuation account that is linked, or ‘stapled’, to an individual employee, so it follows them as they change jobs. This aims to reduce account fees and avoid new superannuation accounts being opened every time an employee starts a new job.
If you don’t meet your choice of superannuation fund obligations, additional penalties may apply.
When to request stapled superannuation fund details?
The new stapled superannuation fund rules commenced on 1 November 2021.
You will need to request stapled superannuation fund details for new employees who start on or after 1 November 2021, when:
- You need to make superannuation guarantee (SG) payments for that employee;
- They are eligible to choose a superannuation fund but don’t. This includes contractors who you pay mainly for their labour and who are employees for SG purposes.
You may need to request stapled superannuation fund details for some employees who aren’t eligible to choose their own superannuation fund. This includes employees who are:
- Temporary residents
- Covered by an enterprise agreement or workplace determination made before 1 January 2021.
If your new employee chooses a superannuation account they already have or chooses your default fund, you do not need to request stapled superannuation fund details for them.
Once an employee tells you their choice of the superannuation fund, you have 2 months to start paying contributions into that fund.
To better understand the due dates for payments of SG contributions, speak to our tax adviser.
Things to do before you request stapled superannuation fund details
Before you request stapled superannuation fund details from the ATO, you will need to:
- Check that your authorised representatives in ATO online services have the Employee Commencement Form permission so your payroll and onboarding staff can make stapled superannuation fund requests;
- Establish an employment relationship link with your new employee by offering all eligible employees a choice of the superannuation fund and submitting a tax file number (TFN) declaration or Single Touch Payroll (STP) pay event.
There may be circumstances where you won’t have an employment relationship recorded in ATO systems before you need to request stapled superannuation fund details.
How to request stapled superannuation fund details
To request a stapled superannuation fund, you (or your authorised) representative, need to:
- Log into ATO online services
- Navigate to the ‘Employee superannuation account’ screen via the ‘Employees’ menu and select ‘Request’ to open the form
- Enter your employee’s details
- Read and click the declaration to sign it.
- Submit your request.
There is no limit to the number of requests you can make. However, a bulk request form is available when requesting large numbers of employees.
What happens once the request is made?
To avoid additional penalties, you must pay SG contributions to a stapled superannuation fund if:
- You have requested stapled superannuation fund details for your employee; and
- The ATO has provided these to you.
If the stapled superannuation fund account provided by the ATO:
- Can’t accept contributions for the employee, you should make another request for the employee’s stapled superannuation fund via ATO online services;
- Is a self-managed superannuation fund (SMSF), you should get the electronic services address and bank account details from your employee.
To avoid the choice shortfall penalty, make sure:
- You request the stapled superannuation fund details for your employee as soon as possible if they have not provided you with their choice of the fund;
- You pay the employee’s full SG contribution to the stapled superannuation fund the ATO returns to you in the request;
- You pay the SG contribution to the stapled superannuation fund by the quarterly due date.
Superannuation guarantee penalties: What happens if your business doesn’t meet its employer obligations
If your business does not meet its superannuation guarantee (SG) obligations, it may have to pay additional penalties or charges on top of the superannuation guarantee charge (SGC).
SG contributions are payable (that is, they must be received by the superannuation fund) by the 28th day of the month following the end of a quarter. If this is not done, the SGC is payable, and an SG statement must be lodged with the ATO, by the 28th day of the second month following the end of a quarter.
Learn more about the superannuation guarantee charge (SGC) here.
What are the penalties?
The ATO recently published on its website an overview of the additional penalties and charges.
- Failure to provide an SG statement when required – The maximum penalty is 200% of the SGC. This penalty cannot be remitted to less than 100% if the SG shortfall relates to a quarter in the period from 1 July 1992 to 31 March 2018.
- False or misleading statement – If your business pays less of the SGC than it should because it made a false or misleading statement, the ATO can impose an administrative penalty. The base penalty amount can be up to 75% of the shortfall, depending on the particular circumstances.
- Avoidance – If your business made arrangements to avoid its SG obligations, an additional penalty might be imposed (on top of the SGC avoided).
- Director penalties – If you are a company director, you need to make sure the company pays the SGC in full by the due date. If it does not, you’ll be liable for a penalty equal to the unpaid amount. The penalty is reduced if the company pays the outstanding amount at any time. Under some conditions, it may be reduced if the company goes into voluntary administration or liquidation.
- General interest charge (GIC) – This is applied if an SGC assessment is made and the SGC is not paid by the due date. The GIC is calculated on a daily compounding basis.
- Choice shortfall – If your business does not comply with the choice of fund obligations, it could receive a ‘choice shortfall’ penalty. The penalty increases the SGC.
- Failing to keep adequate records – The maximum fine for an individual convicted of failing to keep records is 30 penalty units (a penalty unit is $222 where the infringement occurred on or after 1 July 2020).
- Failing to provide employee’s TFN to their superannuation fund – a penalty (10 penalty units) may be imposed if an eligible employee has provided a TFN to your business and your business does not provide it to the employee’s superannuation fund or retirement savings account within the required time.
Discuss your business’ SG and choice of fund obligations with our KMT tax adviser to make sure the business is fully compliant.
The article is provided for general information purposes only and is not intended as professional advice. Readers should not act on the information contained therein without professional advice from a suitably qualified accountant.
