Since the update provided at the last SFWG meeting (7 September 2011) the ATO has been working through a number of the issues identified that require ATO guidance in regard to the electronic option. The ATO has been progressing these issues and continues to obtain the required technical and other internal stakeholder clearances.
The small working group is expected to reconvene in December 2011 to assess progress.
An update on this issue will be provided at the March 2012 SFWG meeting (date to be advised)
The ATO also highlighted the continuing trend of occurrences where individuals have received incorrect Excessive Contribution Tax (ECT) assessments and concerns have been raised by both the individual and the fund regarding the cause of error. The ATO is working to increase communication regarding the correct process for deduction to be claimed including ensuring:
During September / October 2011, approx 140 industry representatives covering 55 organisations attended the 5 ATO education workshops covering lost member and unclaimed superannuation money reporting obligations. Workshops were held in Sydney (2), Melbourne (2) and Brisbane (1).
Feedback from attendees reflected general satisfaction (more than 90%) with the content over the series of workshops. The content was reviewed and changed in light of feedback from the initial sessions.
A fund representative acknowledged the value of content but felt further discussions on expanded interpretative issues would be beneficial.
Fund representatives acknowledged value in the sessions being facilitated by "webinar" with benefits being the reduced cost in travel, etc, and greater opportunity to program a series of sessions, through to incorporating them in training packages. However funds generally recognised the overall value added in face to face sessions, especially the opportunity for interaction.
A fund representative highlighted an issue raised at the Brisbane session. Funds' system limitations when reporting a lost member as "Found" may be compromising the ATO's ability to match and update that member's status on the register.
General discussion highlighted that the majority of funds only report the found member's new address, and not:
The ATO acknowledged that the absence of previously reported addresses may reduce matching the TFN to the member, but the extent of impact may appear relatively low given funds are not reporting these addresses.
The ATO undertook to evaluate the impact this issue has on the unmatched proportion of found members records reported.
Funds indicated the previous addresses are not stored on system front ends and any requirement to include this information would be a significant task, one they are not prepared to change system processes for without stronger guidance from the ATO.
While there are a number of issues being identified at audit, one key trend of interest is the increased number of MCS audit findings of funds reporting multiple members with the same TFN. Most funds identified have indicated their willingness to rectify their systems/processes in response to this adverse finding.
Robert Hodge emphasised that such action by ATO auditors was a concern to the industry as current Superannuation Industry (Supervision) Act 1993 legislation does not support (in fact prohibits) funds use of a member's TFN as an identifier when searching their client database or to identify duplicate accounts. This limitation has been acknowledged by Government and has led to legislative changes to enable the effective operation of a number of Super Reform measures.
As such, the industry view is that the current ATO audit action is inappropriate, but concedes that it will be appropriate with respect to the lodgment of 2011/12 MCS reports.
The ATO sought input from representatives on opportunities for funds to work with the ATO on common issues of note raised with the ATO by various stakeholders through various interactions including feedback from the ASFA Conference:
Brief discussion highlighted some funds are getting enquiries regarding SMSF from independent financial advisers rather than fund members.
6.1 Feedback on the Section 299 TB Notification process (September 2011).
Paul Sims provided the following feedback on MLC's experience with their Sec 299 TB notifications:
13 Members listed in the paper Notification;
Members included were all from one MLC product; all members had only one account.
- 5 members had already left the fund
- 8 member records were actioned in accordance with the Notification (including the no TFN withholding). No members had personal contributions to be returned.
- All original TFN records satisfied the ATO algorithm and there had been no ATO update received to amend the TFN recorded.
- All TFNs have been removed from the member accounts and MLC is about to lodge amending MCS.
- Contact from the Client Relationship Team regarding progress with processing the Notification highlighted the original was sent to the fund at an older interstate address instead of the current fund postal address. The ATO reissued the Notification to facilitate timely processing
- The Notification provides sufficient information to enable the fund to carry out the required activities without reference to the Questions and Answers (Q and A) which repeated a number of issues covered by information included in the Notification. MLC was sufficiently aware of the requirements but reference to the Q and A indicated the content was sufficient.
Recommended improvements included:
- Ensure the Notification is addressed:
- to the fund's / administrator's current postal address rather than the address reported on the original Member Contribution Statement (MCS) lodged by the fund for the member record subject to the Notification; and
- using the contact officer as currently advised on MCS lodgements.
- Delivery of the Notification as a soft copy and by ECI to assist with integrated system processing; and
- inclusion of the "system code" reported on the MCS lodged for the member record subject to the TB Notification would assist funds in processing larger notifications.
The ATO:
- acknowledged the use of an older postal address as a shortcoming in the process and will make the necessary adjustments with future processes
- undertook to examine the other recommendations with the view of incorporating them in future processes.
A number of funds raised concerns regarding the low volume of members issued with a TB Notification. Funds are concerned the reduced numbers (due to ATO data integrity issues) will potentially lead to increased liability exposure for the fund when:
- members not included in the 2011 process may make further contributions; and
- leave the fund during 2011/12 financial year; and then:
- be included in the 2012 TB Notification process.
General discussion highlighted the value of funds actioning member records included in the "please resolve" letter process.
6.2.1 Review of Section 299 TA / please resolve process (2011)
John George provided a statistical overview of the 2011 ATO TFN Notification process:
Notice / Letter Type
|
Number of funds
|
Number of member records
|
Sec 299 TA Notices
|
275
|
Approx 20,000
|
Please resolve letters
|
185
|
Approx 7,000
|
Sec 299 TB Notices
|
21
|
60
|
The ATO confirmed SFWG Secretariat email advice issued Friday 11 November 2011 in relation to Action item 07092011/10, that funds can destroy a Sec 299 TA notice where the member account has been closed.
The ATO is yet to receive formal confirmation from our complex technical area that funds can apply the same process to a "please resolve" letter.
The 2011 please resolve and Sec 299 TA process was significantly impacted by a range of system issues experienced with the automated process impacting data integrity and hampering the process, which contributed to the delay in delivery of the please resolve letters and TA Notifications .
The ATO has implemented a number of system fixes (to redress the data integrity issues), that are to be tested and reviewed from December 2011.
6.2.2 Section 299 TA / Please resolve process (2012)
While a number of data integrity changes to improve the levels of the Sec 299 TA / "please resolve" process have been implemented, they alone do not allow us to automate the process completely.
We anticipate the 2012 process will be run manually, to ensure that it delivers the intended outcomes. Indicative timeframes for delivery are:
- Please resolve - towards the end of the first quarter 2012 ( late February/March 2012)
- Sec 299 TA - March / April 2012
- Sec 299 TB - approx June 2012 with projected volumes of 1,000.
In responding to Action item 07092011/08, Linda Cheesman advised:
- ATO systems do not capture and store all error details in a single accessible location for inclusion in correspondence.
- significant changes to ATO systems would be required to achieve the 'please resolve' process improvements funds are seeking (in the first part of the action item).
The ATO reiterated:
- The please resolve letters are issued where the member's TFN and /or other details (name, date of birth and address) are the cause of the mismatch. All of the data is considered in conjunction with the reported TFN to determine whether the TFN has been validly quoted in relation to the member to whom the TFN was issued.
- The Notification processes undertaken by the ATO in 2011 (and 2009) have been resource intensive activities with the ATO validating each individual record included in the process and providing support to funds seeking clarification.
- As mentioned previously, the ATO has implemented a number of system changes to increase the data integrity of please resolve cases, however these changes do not enhance identification (and reporting) of the unmatched data fields.
General discussion highlighted:
- the Super Reform measures (including use of TFN, expanded member reporting requirements, member validation service, etc) will significantly impact the please resolve process, reducing the benefit (for both the ATO and industry) of any further system changes to that process; and
- both the ATO and industry will have limited resourcing to support additional system changes given the resourcing commitments required to deliver Super Reform initiatives already scheduled.
Accordingly, the ATO does not expect to proceed with the suggested changes.
Funds confirmed the intent of the action item was to seek a change to the process that enhanced the identification of fund's member data fields (e.g. name, date of birth, etc.,) that do not match with ATO held data. Without this improvement the please resolve process represents a significant workload for funds (approx 3 to 4 weeks for larger funds).
The ATO indicated support could be provided to funds should the 2012 process be generated manually.
Funds reiterated their preference to maintain the please resolve process (even in manual form) rather than to remove it and have only a Sec 299 TB process.
In regard to the suggestion that the ATO develop a member letter equivalent to the please resolve fund letter (the second part of the action item), advising the member of the potential issues stemming from not providing the correct TFN to their fund, the ATO advised:
- The main reason that we are sending out a please resolve letter to the fund and not the individual is that we do not hold enough data to adequately identify or match the client to the correct TFN and they are currently considered unmatched within our systems. Therefore we can't identify the right client to send the letter to hence the please resolve letter is sent to the fund instead.
The ATO provided a further update in relation to Action item 30032010/06 in which the ATO sought to improve its process by ensuring that please resolve letters are not issued each year for the same member from MCS lodged by the fund.
The ATO advised:
- the required system change is not in scope due to the impact Super Reform measures will have on the Sec 299 TA / please resolve process. Any change would only be used in the 2013 year it is unlikely these can be implemented.
The ATO will continue to consult with industry about future improvements that can be made.
6.2.3 Section 299 TA / Please resolve process (2013)
A number of options for managing the 2013 process are to be considered.
We will defer a decision about how to proceed until further analysis and consultation is undertaken. The outcomes of the analysis that we are currently conducting will not be known until mid December.
- if our analysis shows that errors in the automated system have been fixed we would like to allow our system to operate as it designed.
- the impact of this on funds it that TA notices and please resolve letters will potentially be sent to you every time an MCS is lodged;
- a current system business rule delays the generation of the notice or letter by 55 working days (almost 3 months after lodgement -end of January for October MCS lodgments).
- Funds have 60 days to action a please resolve letter before the ATO may issue a Sec 299TB notice.
- The only real alternative for 2013 is a manual process similar to what we have described for 2012.
The ATO sought feedback from funds on their preference to receive any Notices or letters that may require a change to our business rules. Scope does exist to push out the please resolve timeframe to 90 days.
Given MCS peak lodgement period is October, funds indicated a preference that the notices and letters:
- do not issue in the lead up to December / January period due to business closures, annual leave and bi annual statement generation activities early in the New Year.
- to issue within 7 - 14 days of MCS lodgement (avoiding the December / January period).
A number of funds advised they have not implemented automated processing of the TA notifications into their superannuation reporting systems.
6.3 Provision of TFNs in the Future
The ATO highlighted increased use of TFNs is critical to a number of Super Reform initiatives. For example, member accounts will be displayed on line to assist:
- members reuniting with their super, and
- funds account consolidation initiatives,
Accounts without TFN will not be displayed.
The ATO is examining a number of options to use the power to provide TFNs through Sec 299 TA Notification more broadly. For example, the proposed Member Identity Validation Service (from early 2014).
6.4 Improvements to correspondence
While it is unlikely any changes can be made for the upcoming 2012 process, the ATO is considering a number of suggestions from the funds for future processes.
- Section 299TA notice
- We will update the TA paper notification to include a reference to no action required on accounts that are closed.
- The ATO has also assessed the TA notification as a high risk to integrity due to the extent of the member's proof of identity data that is included.
- The ATO will consult with funds to ascertain a reduction in details provided, e.g. if we were to remove the member name from paper notices, would the presence of member number, corrected TFN, date of birth and identifier number be sufficient to action the notice?
Other small changes to the letters may be made for 2013
Carolyn Harris provided an overview on a number of key scheduling issues.
7.1 Lost member register (LMR) - provision of updated address program
Preparations for the November 2011 process are progressing well. Testing of our data has been carried out and the updated address data is expected to be made available to funds by the end of November 2011.
Approx 180 funds are participating (60 more than May 2011) and approx 700,000 updated addresses worth approx $3B will be provided to funds for review and update.
Analysis of the January and May 2011 process has identified approx 140,000 lost member accounts have been reunited, worth approx $1B.
With reference to ATO strategies to reunite members with their lost super, the ATO will focus on the updated address program, in preference to other outbound campaigns by telephone or letter.
- Telephone account reviews have ceased for the remainder of 2011/12; approx 127,000 account reviews have been carried out since July 2011.
- Plans for any outbound letter campaign will not be considered until later in the 2011/12 financial year.
7.2 Lost member register (LMR) re-report
Progress with system design issues to facilitate the refresh of the LMR is progressing well. The ATO is on target to deliver capability for the re-report process in April 2012.
7.3 Unclaimed superannuation money (USM)
7.3.1 USM specifications
The USM specification v5.0.0 draft has been revised with the final version to be published in early December. This version will be the only version acceptable from 26 November 2012.
Note - Final version of USM specification v5.0.0 published on 16 December 2011
7.3.2 USM Case discussion
A fund has sought clarification on the correct treatment to be applied to a new member account (transferred from another fund or employer contribution received) where the member's address is unknown and that at the unclaimed money day, no further contributions have been received.
General discussion highlighted funds are not treating this issue consistently.
The ATO recognises the LMR protocol document has some limitations in applying the law in a strict sense. Our view in relation to this scenario is that it would be reasonable for the fund to determine that the member does satisfy the lost criteria.
The fund may not have an address for the member but is receiving regular contributions. It would not be reasonable in these circumstances to consider the member as lost.
The ATO undertook to provide a response for distribution through SFWG Secretariat.
Action item
|
22112011/01
ATO to advise on the correct treatment for unclaimed money statement purposes of a new account without an address held by the fund for the member where upon the unclaimed money day, no further contributions have been received.
|
Responsibility:
|
Louie Markovski / John George
|
7.4 Transfer of co-contributions to Superannuation Holding Account special account (SHAsa)
CRT Alert 039/2011 issued Thursday 10 November 2011 to all funds, advising the ATO has commenced the transfer of aged unpaid member co-contribution entitlements from their ATO co-contribution account to the member's ATO tax free SHAsa account. This Alert was updated Wednesday 16 November; clarifying the correct reporting of these entitlements.
Approx 24,000 member entitlements (worth approx $13M) will be incrementally transferred during November and December 2011.
Payment of these entitlements will occur in the monthly SHAsa payment process:
- once a valid fund destination can be determined; and
- separate remittance advices (RARN) will issue electronically (Electronic Commerce Interface (ECI)) for these payments. As tax free government co-contributions, the RARN type will be "ORM".
This will mean some funds will receive two monthly SHAsa remittance advices in the same SHAsa ECI transmission, one for tax free entitlements and the other for the traditional taxable entitlement ("ERM").
Note. CRT Alert 042/2011 issued Wednesday 23 November 2011 requesting funds to suspend processing activities in relation to ERM files received due to tax free SHAsa entitlements being incorrectly reported to funds in the taxable ERM files.
Further updates have been provided in relation to this issue including details of the individual entitlements incorrectly reported.
Funds have been requested to return unprocessed entitlements by way of an ORM SHAsa payment variation advice.
The resolution of incorrectly reported entitlements that have been processed by funds as taxable employer contributions is still be progressed.
7.5 Update on Super Report user liaison.
In response to Action item 07092011/16, the ATO advised members that in August 2011, the ATO contacted a number of Super Report users to gauge their use of Super Report in light of a number of issues that impacts the ongoing provision of the Super Report system:
- the system is built on an information and technology platform which is now outdated; and ;
- Microsoft no longer supports the platform.
Super reform measure changes will also limit the use of Super Report (with no scope to update) to cater for impending new reporting obligations and processes.
Fund members expressed their concern with any decision to discontinue the use of Super Report without a suitable alternative including the provision of a front end graphic user interface (GUI),
Several members advised that Super Report is that is critical to their reporting processes, being used mainly to lodge problematic single transaction including amendments (Member Contribution Statements); and PVA transactions that could not be automated through generic business systems. Most funds do not use Super Report for initial mainstream reporting processes.
The ATO undertook to progress the issue further and provide updates as required.
Linda Cheesman provided a brief overview of the following issues:
8.1 December 2012 payment process
The ATO will bring forward the monthly co-contribution payment process by one week will enable funds to allocate member entitlements prior to business closure over the Christmas / New Year period. Remittance advices and payments will be released week commencing Monday 5 December 2012. There will be no monthly SHAsa payment process.
The ATO Calendar of Activities will be updated shortly and reissued.
Note: The updated ATO Calendar of Activities issued with CRT email ATO update on Wednesday 18 January 2012.
8.2 Reintroduction of monthly Co-contribution Recovery
The ATO continues to work through the resolution of a number of residual issues impacting the monthly co-contribution recovery process.
A further small daily process will be undertaken in the week commencing Monday 12 December to test the process end to end. Impacted funds will be notified by CRT Alert email.
Pending the successful outcome of this small test process, the ATO anticipates reintroducing the monthly recovery process in late January 2012 with recovery notices and correspondence issuing in the week commencing Monday 30 January 2012.
Further updates will be provided to funds through CRT Alert email
Note: CRT Alert 004/2012 issued Wednesday 25 January 2012 advised funds of the recommencement of the monthly co-contribution recovery process, with Recovery Notices and other correspondence being issued during the week commencing Monday 30 January.
8.3 Outcome of peak processing - Member Contribution Statement (MCS) lodgements
In September 2011, the ATO contacted a number of funds that lodge larger volumes of MCS, inviting them to consider lodging earlier and to provide details of lodgements thereby allowing the ATO to better manage annual MCS processing through our peak processing period (i.e. individual income tax returns, fund MCS lodgements, lost member statement and unclaimed superannuation money statements; all due 31 October 2011.
30 of the 54 funds responded, leading to stronger MCS lodgement patterns in late September and October 2011. This achieved an increased number of members being paid their entitlement earlier in the October and November payment processes compared to 2010 processing.
Delivery feedback indicates that processing has been able to be completed with little or no issues. Anecdotally there has been a decrease in the number of errors generated during MCS processing this year, which indicates our systems are working well. We have also noted a decrease in correspondence enquires around 'Where's my co-contribution' which is another positive indicator.
Current year to date (YTD) processing reflects only a small increase of MCS lodgements (1.4%) overall this year (14.27M) compared with similar period YTD 2010 processing (14.07M).
Michael Zeitlhofer provided a brief update on Stronger Super developments:
9.1 Legislation Update
The following legislation has been introduced to Parliament:
- Superannuation Guarantee rate increase
- Excessive Contributions Tax age limit and
- Low income super co-contributions (LISC)
The ATO is currently working through a number of issues relating to the LISC payment which unlike co-contributions, can be paid to eligible individuals who aren't required to lodge income tax returns. These issues primarily relate to determining a persons income tax lodgement obligations and the calculation of their income from third party information (e.g. payment summaries).
9.2 Funds Reform Reference Group (FRRG)
The first FRRG meeting occurred on Tuesday 18 October 2011. It is expected this group will generally meet monthly for the coming year.
This group comprises a cross-section of fund types, administrators and software developers. It has primarily been formed to consult upon the administrative design of the various super reforms, hence the need to keep its membership relatively small.
Key issues discussed at the first meeting.
Low income super contribution (LISC)
We will seek alignment with the co-contribution process wherever possible.
LISC will provide a government contribution to approx 3.5 M individuals (3.5 times bigger than co-contribution population base), but as the maximum benefit is $500, the average payment value will be lower that current co-contribution entitlement payments. The LISC payment will be a separate payment from current co-contribution entitlement and will likely be a separate transaction.
Concessional contributions caps / reporting balances
Focus was centred on budget proposals industries desire to change the over 50's with $500,000 ECT budget measure.
Significant changes may be required to facilitate the increased MCS reporting for members approaching 50 years of age.
Fund representatives highlighted concerns industry has about the limited time available to develop and implement changes to reporting by the proposed commencement date (1 July 2012).
The ATO has escalated this issue to representatives of both Treasury and the Government.
Display memberships tool / SuperMatch
At the meeting, we went through some screen mock-ups of the new display memberships tool, which will display individuals' super accounts and balances, as well as give them an opportunity to initiate the consolidation of their accounts.
We also discussed revisions to SuperMatch and the improvements which will see the tool display lost and unclaimed super, as well as active and inactive accounts.
9.3 ATO has contracted an external research agency for user research activities.
Fund representatives may be aware of the appointment of an external research agency to undertake user research activities on behalf of the ATO. The research will assist the ATO in understanding the various issues impacting funds in the reform process. The research will cover individuals, Employers, intermediaries, APRA funds, SMSF Trustees and SMSF Approved Auditors.
While the ATO may provide data to the researcher to help them select interviewees, we do not select them. This is entirely the role of the researcher, given the risk of skewing the survey responses.
It is expected that an initial contact with approx 20 funds will be made to carry out in-depth interviews. This will assist in the development of an online opt-in electronic survey for approx 200 funds.
9.4 ATO Super Reform Roadshows
Approx 350 fund representatives have attended the November 2011 ATO Roadshows held in most capital cities (excluding Hobart, Canberra and Darwin).
Frequently asked questions (FAQ's) are being formulated based on the issues raised at these sessions. These will be made available at the earliest opportunity.
Note: CRT email issued Monday 30 January 2012 advised SFWG members that the ATO Daily Update issued on Friday 28 January 2012 provides questions and answers to help super funds and their administrators prepare for the implementation of various super reforms.
10.1 SuperMatch - consent of members
A fund representative sought clarity around the current member consent requirements for funds lodging a SuperMatch request for that member. Funds are of the view that the member consent requirements are satisfied where the fund has provided notification to members by way of a product disclosure statement or in the fund's Annual Report, rather than that the fund must receive the members' consent.
General discussion highlighted that it was a requirement in the past for funds to obtain consent, but that this had changed several years ago to the notification requirement outlined.
Action item
|
22112011/02
ATO to provide clarification for funds regarding the SuperMatch member consent requirements.
|
Responsibility:
|
Mary Murray
|
10.2 Status of Member Contribution Statement protocol document
A fund representative sought clarification of the status of MCS protocol document.
The MCS protocol was published to www.ato.gov.au on Wednesday 20 July 2011.
Changes identified for the protocol will be implemented at the next review.
10.3 Access to Superannuation Guarantee (SG) statements of account (SoA)
In response to a query relating to the unavailability of SoA for Superannuation Guarantee, the ATO advised members to email opssupercrt-rundle@ato.gov.au with details of the fund, and period. Screen dumps of account details will be provided in lieu of a formal SoA.
Note: SG is a legacy system based product and is not included in the functionality for enterprise wide SoA. Functionality is expected to be available after SG is transferred to the ATO integrated core processing platform.
10.4 Update on the Notice of intention to claim a deduction for personal super contributions
A fund representative sought an update on the finalisation of the Notice (NAT 71121)
Action item
|
22112011/03
ATO to provide an update on progress with finalising the Notice of intention to claim a deduction for personal super contributions (NAT 71121).
|
Responsibility:
|
John George
|
10.5 Issues with accessing the Self Managed Super Fund (SMSF) verification service
Funds discussed a series of outages recently on the SMSF verification service that impacted their ability to process member roll-over requests to nominated SMSFs.
The ATO advised that funds experiencing issues with accessibility to the verification service that are clearly not related to an AUSKey access problem, should escalate the access issue along with details of the member and SMSF involved by email to super-ier@ato.gov.au. The ATO will verify the member and SMSF with priority to provide a timely response to the fund.
10.6 Update on the proceeds of crime issue.
No update is available on a request for advice on this issue. ASFA has written separately to the ATO and Treasury seeking advice.
Further updates will be provided as required.
Scott Hooper thanked all attendees for the contribution and acknowledged those that had agreed to present specific sessions, to a very successful meeting.
Reference
|
Action Item
|
Allocated To
|
22112011/01
|
ATO to advise on the correct treatment for unclaimed money statement purposes of a new account without an address held by the fund for the member where upon the unclaimed money day, no further contributions have been received.
|
Louie Markovski / John George
|
22112011/02
|
ATO to provide clarification for funds regarding the SuperMatch member consent requirements
|
Mary Murray
|
22112011/03
|
ATO to provide an update on progress with finalising the Notice of intention to claim a deduction for personal super contributions (NAT 71121).
|
John George
|
Reference
|
Action Item
|
Allocated To
|
Last Modified: Wednesday, 25 July 2012