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  • Successor fund transfer reporting

    Regulation 6.29 of the Superannuation Industry (Supervision) Regulations 1994 (SISR) states – a member's benefits must not be transferred from a fund unless a member's consent has been given.

    Exceptions apply to successor fund transfers (SFTs) and transfers to MySuper products when member consent is not required but specific criteria are met.

    Transfers to MySuper products are outside the scope of this chapter and do not involve an SFT. These transfers should be considered in the context of normal fund reporting, as outlined in the rest of the fund reporting protocol.

    If a member’s account is transferred from one registrable super entity (RSE) to another RSE with a different Australian business number (ABN), without their members' consent, an SFT has occurred. When the same entity is the trustee for more than one RSE, an SFT can also occur when their members' accounts are transferred from one RSE to another within the same group.

    When the trustee of the transferring fund transfers cash and other assets of the fund to a successor fund, the transferring fund makes a payment that is a super benefit, of each member's benefits to the successor fund. The payment of each member's benefit is a rollover super benefit.

    A member’s account can also be transferred to the ATO in accordance with the Superannuation (Unclaimed Money and Lost Members) Act 1999. However, this type of transfer is not covered as part of this chapter.

    An SFT has not occurred when a change in platform or service provider has occurred within the same RSE ABN resulting in changes to account identifiers only. This chapter does not cover these situations.

    Next step:

    See also:

    Managing member accounts

    Updating member account transactions

    Before closing member accounts, the transferring fund will need to ensure the reporting of member account transactions and contributions is up to date and accurate at the time of the transfer.

    In line with normal member transaction reporting obligations, contribution information is required to be reported within 10 business days or such later date as the Commissioner may allow, of allocation to a member's account. These requirements are outlined in detail in the MATS Business Implementation Guide (MATS BIG).

    See also:

    Reporting account balances

    In the interests of the member experience, the successor fund may choose to report the opening balance of an account, particularly in instances where an account has been closed and a new account opened early in a financial year. This is because the new account will not show with a balance in the list of current accounts on ATO online services until that balance is reported, which in some cases may be up to 16 months later.

    If the successor fund chooses to do this, they will not be reporting with an effective date of 30 June and will still need to report a 30 June balance on or before 31 October following the end of that financial year to meet their reporting obligations.

    Example – accumulation accounts closed on 30 July 2019 and new accounts opened on 30 July 2019

    Provider A is transferring its members to Provider B as part of a successor fund transfer. Provider A closes all of its member accounts as at 30 July 2019. Provider B opens the new accounts on 30 July 2019. The accounts for Provider A will no longer be displayed on the ATO online services Fund details tab and the accounts opened in Provider B will display in the Fund details tab but with no balances.

    For an improved member experience, Provider B chooses to report opening balances for these new accounts as at 30 July 2019 so that its members are able to see the balances prior to the legislated annual balance reporting date for these accounts of 31 October 2020.

    End of example

    See also:

    Updating member account attributes

    As with member-instigated rollovers, funds undergoing an SFT will have a requirement to report open or closed accounts and account changes, as outlined in the MAAS Business Implementation Guide (MAAS BIG) and Member account reporting and validation.

    See also:

    Member account identifiers

    It is not mandatory for a successor fund to use the same member account identifiers as the transferring fund.

    See also:

    Reporting closed accounts

    The transferring fund should close member accounts before the successor fund opens new member accounts. This reduces the risk that members will see old account information on ATO online services.

    The transferring fund must report the account as closed using the:

    • fund unique superannuation identifier (USI)
    • member account number
    • account phase and account status.

    The transferring fund should monitor the reporting of closed accounts for any errors and will need to advise the successor fund of any errors as these accounts will remain open in the transferring fund until the issue is resolved.

    See also:

    Reporting open accounts

    The successor fund should open new member accounts shortly after the transferring fund closes member accounts. This ensures that the new member details are provided to the ATO to allow any payments to be made to the new account and for account information to display on ATO online services.

    If the successor fund has been advised by the transferring fund of errors in reporting closed accounts, the successor fund should wait for the transferring fund to resolve this prior to reporting open accounts.

    See also:

    Example

    Fund A is undergoing an SFT to Fund B. Fund A must report member accounts as 'closed' within 5 business days or such later date as the Commissioner may allow of closing the member accounts. Fund B must report member accounts as 'open' within 5 business days or such later date as the Commissioner may allow of opening the member accounts.

    Funds A and B have discussed and agreed when they expect the closing and opening of member accounts to occur. Fund A advises Fund B as soon as the member accounts have been closed to allow new member accounts to be opened shortly after.

    End of example

    Lost members

    For the purposes of the Superannuation (Unclaimed Money and Lost Members) Act 1999, a member of a super provider is a lost member if the member is:

    • a lost member within the meaning of regulation 1.03A of the SISR.
    • a lost RSA holder within the meaning of regulation 1.06 of the RSAR.

    These regulations define a member of a super provider to be a lost member at a particular time (subject to limited exception) if either:

    • the member satisfies the definition of being ‘uncontactable’
    • the member satisfies the definition of being an ‘inactive member
    • the member joined the fund or RSA from another super provider as a lost member.

    If a lost member's superannuation benefit is transferred to a successor fund the member’s ‘lost’ status moves from the transferring fund to the receiving fund. The successor fund will need to open the new account with the lost status member account attribute as lost if the member was already lost in the transferring fund.

    See also:

    Unclaimed superannuation money (USM)

    Payment of accounts under the Superannuation (Unclaimed Money and Lost Members) Act 1999 (SUMLMA)

    Trustees should consider the guidance below when assessing accounts for Unclaimed Superannuation Money (USM) purposes when an SFT has been undertaken. The below guidance will apply regardless of whether the successor fund has the same trustee as the transferring fund.

    Members aged over 65 years old

    Under subsection 12(1) of the SUMLMA, an amount payable to a member of a fund (including accumulation, defined benefit and pension members) is taken to be unclaimed money if all of the following apply:

    • the member has reached eligibility age
    • you have not received an amount in respect of the member (and, in the case of a defined benefits super scheme, no benefit has accrued in respect of the member) within the last two years
    • after a five-year period since you last had contact with the member, you have been unable to contact the member again after making reasonable effort.

    The transfer of a member’s superannuation benefit to a successor fund is considered an amount received in respect of a member for the purposes of the successor fund determining the two-year period under subsection 12(1) of the SUMLA. Similarly, the five-year period specified for contact would commence from the date of the SFT.

    Deceased members

    Under section 14 of the SUMLMA, an amount payable in respect of a member of a fund is taken to be unclaimed money if all of the following apply:

    • the member has died
    • you determine that, under the governing rules of the fund or by operation of law, a benefit (other than a pension or annuity) is immediately payable in respect of the member
    • you have not received an amount in respect of the member (and, in the case of a defined benefits super scheme, no benefit has accrued in respect of the member) within the last two years
    • after making reasonable efforts and after a reasonable period has passed, you are unable to ensure the benefit is received by the person who is entitled to receive the benefit.

    The transfer of a member’s superannuation benefit to a successor fund is considered an amount received in respect of a member for the purposes of the successor fund determining the two-year period specified under s14 of the SUMLMA.

    Inactive low-balance accounts

    Section 20QA of the SUMLMA provides the definition of an ILBA as an account that meets all of the following criteria (subject to limited exception):

    • No amount has been received for the last 16 months.
    • The account balance is less than $6,000.
    • The account is not a defined benefit account.
    • The member has not met a prescribed condition of release.
    • Insurance is not being provided in the account.
    • The fund is not an SMSF or small Australian Prudential Regulation Authority (APRA) fund.

    The transfer of a member's superannuation benefit to a successor fund, is considered as an amount that has been received for the purposes of the successor fund determining the 16-month period specified in section 20QA of the SUMLMA.

    Lost member accounts and USM

    The money held for a lost member remains with the successor fund, unless it meets the definition of a lost member account (balance of small accounts and inactive accounts of unidentifiable members) at the end of an unclaimed money day. In these cases, it is paid to the ATO as USM.

    Small lost member account

    You must report and pay to the Commissioner amounts that meet the definition of lost member account – small account.

    Under subsection 24B(1) of the Superannuation (Unclaimed Money and Lost Members) Act 1999 (SUMLMA), an account in a fund is taken to be a lost member account – small account if all the following apply:

    • the member on whose behalf the account is held is a lost member
    • the balance of the account (on the unclaimed money day) is less than $6,000
    • the account does not support or relate to a defined benefit interest

    At the end of an unclaimed money day, you must identify any accounts that belong to lost members where the balance is less than $6,000.

    Insoluble lost member accounts

    You must report and pay to the Commissioner amounts that meet the definition of a lost member account – inactive account of an unidentifiable member. This type of lost member account is commonly referred to as an insoluble lost member account.

    Under subsection 24B(2) of the SUMLMA, an account is taken to be an insoluble lost member account if all the following apply:

    • the member on whose behalf the account is held is a lost member
    • you have not received an amount in respect of the member within the last 12 months
    • you are satisfied it will not be possible, considering the information reasonably available, to pay an amount to the member
    • the account does not support or relate to a defined benefit interest

    The transfer of the member account to a successor fund is considered an amount received in respect of a member for the purposes of the successor fund determining the 12 month period specified under subsection 24B(2) of the SUMLMA.

    SFT and USM reporting

    If an SFT occurs between the unclaimed money day and the scheduled statement day, the successor fund does not have reporting or payment obligations with respect to unclaimed money, lost member accounts and inactive low-balance accounts for that unclaimed money day. The reporting and payment obligations remain with the transferring fund.

    SuperMatch

    The SuperMatch service enables super fund trustees (excluding self-managed superannuation funds) to obtain details of active superannuation fund accounts. This includes lost accounts or any ATO-held monies for an individual from the ATO. The use of SuperMatch is restricted to trustees of super funds. It can be used for beneficiaries (members) of the fund, or individuals who are applying to become a member of that fund. Providing this information to super fund trustees will help consolidate super accounts for their members.

    Customer verification requirements

    Before using SuperMatch for an individual, trustees must successfully complete customer verification. This ensures they are providing access to the SuperMatch service and the results to the person they are dealing with. Usually, this customer verification is completed by the fund trustee. However, there are limited circumstances where a fund trustee can be assured (and can demonstrate to the ATO) that the required level of customer verification has been completed by another entity. For example, by the trustee of a transferring fund prior to an SFT occurring.

    For an SFT, we expect the trustee of the successor fund to:

    • have an in-depth understanding of the customer verification policy and procedure used by the transferring fund and be assured that they meet the requirements of the SuperMatch terms and conditions of use
    • have an assurance that the policy and procedure were followed by the transferring fund 
    • obtain relevant evidence of the above and be able to provide that to the ATO.

    If the member TFN has been transferred to the successor fund during SFT, the member has provided their TFN to the successor fund. Therefore, they will not be required to re-submit their TFN for a SuperMatch search. However, the successor fund will need to obtain the member’s explicit consent to use that TFN for the search.

    Funds undertaking SFT’s should lodge an enquiry through the Super Enquiry Service for guidance.

    The trustee will need to provide the ATO an updated application to SPREnablingServices@ato.gov.au if there are changes that may impact the fund’s use of the SuperMatch service such as:

    • an SFT
    • a change in DSP, or
    • other significant changes.

    See also:

    Former temporary residents and section 20C notices

    If a transferring fund holds outstanding section 20C notices from the ATO identifying former temporary residents, the transferring fund should respond to the notices prior to the SFT.

    However, where a transferring fund cannot process a section 20C notice for a particular member due to a pending claim, the transferring fund must respond to the section 20C notice with error code SUPER.GEN.RLVR.7 – see This link will download a fileRollover User Guide (PDF, 680KB).This link will download a file

    This link will download a fileFor example, a transferring fund may have a pending Departing Australia Superannuation Payment claim which will be paid to the member prior to the SFT, rather than to us as USM.

    If, after responding to the notice with an error code, the pending claim is unsuccessful, the following actions can be taken:

    • If the transferring fund still holds the account, they can pay the amount to us as USM in the next reporting period via the Rollover Transaction Request using USM reason code ‘R’.
    • If the SFT has taken place and the account has been transferred, the successor fund can pay the amount to us as USM in the next reporting period via the Rollover Transaction Request using USM reason code ‘R’.

    Note: A new section 20C notice will not be issued to the successor fund.

    See also:

    Blackout periods

    Both the transferring and successor fund and their administrators will need to communicate and agree on a blackout period where no reporting will occur and contributions cannot be accepted.

    Funds should lodge an enquiry through the Super Enquiry Service to advise of the agreed blackout period so that ATO-held contributions are not made during this time.

    Funds will need to advise employers, clearing houses and members of the blackout period so that contributions will not be made during the period where processing will not occur.

    A blackout period may also impact the transferring fund's ability to comply with a commutation authority.

    Transferring funds:

    • must ensure that commutation authorities – with a due date in the blackout period – are complied with before it impacts their ability to do so.
    • are encouraged to ensure that any excess transfer balance commutation authorities with a due date after the SFT date are complied with before the SFT. If they are not, the member is likely to be in excess for longer and will pay more excess transfer balance tax. It is also likely that a commutation authority will be sent to the receiving fund.

    Funds should lodge an enquiry through the Super Enquiry Service if they need advice on commutation authorities issued to them which need to be complied within the 60 days before the SFT date.

    Note: Contributions made through the Small Business Superannuation Clearing House (SBSCH) are not ATO-held contributions and may be rejected back to the employer, as they will not be redirected to the successor fund.

    Transfer of pending payments

    Terminal medical condition (TMC)

    Problems may arise in an SFT where members have provided their fund with a TMC certification and the benefit does not need to be immediately withdrawn. A TMC can be rolled over, but it will not meet the definition of a rollover super benefit.

    As these payments are 'pending' it means that a condition of release has been met; and therefore, the benefits would be unrestricted non-preserved.

    Therefore, if the transferring fund transfers a pending TMC benefit payment, it will be considered a non-concessional contribution.

    In these situations, it is possible that the non-concessional contribution results in an excess non-concessional contribution determination being issued for the member.

    If this determination issues, the member can apply to the Commissioner for an excess contributions determination to disregard the contribution due to special circumstances.

    To avoid such issues the transferring fund can instruct the member/beneficiary to withdraw any certified TMC benefit before the SFT.

    If an SFT occurs and a member who suffers from a TMC receives a lump sum payment while the certification period has not expired, the income would be classified as non-assessable non-exempt income under 303-10(2) of the ITAA 1997. The certification requirements apply to the member as per regulation 6.01A of the SISR, rather than the fund.

    Disability superannuation benefit

    A disability superannuation benefit is defined as a superannuation benefit under 995-1 of the ITAA 1997.

    Where a disability superannuation benefit is pending and an SFT is due to occur, the transferring fund can rollover the disability superannuation benefit to the successor fund. The benefit will be considered a rollover super benefit.

    Temporary incapacity

    A benefit payable to a member suffering temporary incapacity (for example income protection or salary continuance) is not able to be rolled over.

    As part of the SFT, the ownership of the insurance policy and the liability to pay the benefit payments would need to be transferred to the successor fund.

    In the event that a payment is pending and the transferring fund holds cash, the payment cannot be transferred as a non-concessional contribution. The transferring fund should process the payment prior to the SFT.

    Death benefits

    The transfer of the deceased member's interest in the transferring fund can be treated as a rollover of the deceased member's benefit until the beneficiaries are identified, rather than a payment of a death benefit to the beneficiaries (whether they are dependant or not). Payments will only be death benefits once the beneficiaries are identified. If the beneficiaries are known, then the death benefit should be paid to the individuals or executor of the deceased estate prior to the SFT.

    The successor fund must comply with the Superannuation Industry (Supervision) Act 1993 (SISA) requirement to cash the deceased member’s benefit as soon as practicable. The successor fund must take the same action that the transferring fund would have taken in regard to the deceased member’s interest had the interest remained in the transferring fund.

    Next step:

    Lump sums – disability modification

    In the same way as for member-instigated rollovers, data will need to be transmitted to the successor fund about each member to enable the disability modification calculation to be done if the member later becomes disabled and requests a superannuation lump sum benefit to be treated as a disability superannuation benefit. This will include:

    • the date the member joined the transferring fund
    • if a rollover amount was received by the transferring fund with an earlier service period start date for that member, that earlier start date
    • for an employer-sponsored fund, when the member’s employment started, if that was before the start of their fund membership.

    Income streams

    Where an SFT involves members in receipt of superannuation income streams, the income streams stop in the transferring fund, and new ones start in the successor fund.

    Reporting for retirement phase income streams

    The reporting requirements for retirement phase events will differ depending on the type of income stream a member receives.

    As well as reporting the commutation and new income stream, the relevant closing of the transferred accounts and opening of the new accounts must also occur, by the MAAS.

    The transferring fund should report the MCO event simultaneously or before the successor fund reports the new income stream event.

    If this does not occur, we will 'double count' the credits in the member's transfer balance account and the member may exceed their transfer balance cap. This may lead to the members' excess transfer balance being sent to determinations.

    Transferring fund

    Receiving fund

    Retirement phase

    Report MATS Retirement Phase Event

    Report account as closed using the SFT date as status date

    Report account as open using the SFT date as status date

    Report MATS Retirement Phase event

    Superannuation income stream (SIS)

    Member commutation (MCO)

    Close account via MAAS

    Open account via MAAS

    SIS

    Child death benefit income stream (ICB)

    MCO

    Close account via MAAS

    Open account via MAAS

    ICB

    Reversionary income stream (IRS)

    MCO

    Close account via MAAS

    Open account via MAAS

    SIS

    Reversionary child death benefit income stream (ICR)

    MCO

    Close account via MAAS

    Open account via MAAS

    ICB

    Capped defined benefit income stream

    MCO

    Close account via MAAS

    Open account via MAAS

    SIS

    If the transferring fund initially reported an income stream event for the member, the transferring fund will report an MCO (member commutation) event upon ceasing the income stream. The date of the MCO event will be the SFT date. The value of the MCO event will be the value of the debit calculated at the SFT date.

    The successor fund will report a new income stream event. The date of the new income stream event will be the date it starts in the fund. It would generally be expected to be the SFT date and that the value of the MCO event and income stream event would be the same unless the income stream is a capped defined benefit income stream.

    For reversionary income stream (IRS) and reversionary child death benefit income stream (ICR) the ATO's application of the initial credit to the individual’s transfer balance account will not be impacted by the SFT arrangement, even if the SFT occurs during the 12 months between the date of death of the member and the credit arising in the individual‘s transfer balance account.

    SFTs involving capped defined benefit income streams (CDBIS)

    If the SFT involves a CDBIS, the transferring fund must report the commutation debit calculated in accordance with subsection 294-145 ITAA 97 (QC 63523 provides additional guidance for life expectancy and market linked products).

    The receiving fund must report the special value of the credit calculated in accordance with subsection 294-135 of the ITAA 97s (LCR 2016-10 and LCR 2017-1 provide additional guidance).

    The value of the commutation debit may be less than the value of the credit.

    If the member has credits from CDBIS only in their transfer balance account this will not result in the member having an excess transfer balance.

    If the member has credits from a CDBIS and an account-based pension in their transfer balance account the member may have an excess transfer balance and be sent an excess transfer balance determination.

    Reporting for income streams not in retirement phase

    Some income streams are not in retirement phase. These are commonly transition to retirement income streams when the member has not met a condition of release with a nil cashing restriction.

    As these income streams are not in retirement phase, there is no retirement phase event reporting associated with the income stream stopping in the transferring fund and starting in the receiving fund.

    Next step:

    • lodge an enquiry through the Super Enquiry Service for further guidance.

    Minimum pension standards

    Transferring fund

    The trustee of the transferring fund is responsible for ensuring the minimum pension payment requirements are met for each of the pension's payable from the beginning of the current financial year up to the date of the SFT.

    If a pension stops being in the retirement phase because the minimum pension payment requirements are not met before the date of the SFT, the transferring fund must report a STO event (income stream stops being in the retirement phase) for the member.

    The date of the STO event will be the stop time. The value of the STO event will be the value at the stop time. The successor fund will report a SIS event. The date of the SIS event will be the SFT date. The value of the SIS event would be the value at the SFT date.

    The transferring fund must report the STO event simultaneously or before the successor fund reports the SIS event.

    Successor fund

    The trustee of the successor fund is responsible for ensuring the minimum pension payment requirements are met for each of the pensions payable from the date of the SFT to the end of the relevant financial year.

    An exception to this responsibility is prescribed under clause 4 of Schedule 7 to the SISR where the commencement of the new pension is on or after 1 June in the relevant financial year.

    The successor fund will need to recalculate the minimum pension payments based on the member account balance at the time of the SFT, or, for an SFT after 1 June, based on the account balance at 1 July the following financial year.

    Example

    Fund A is undergoing an SFT to Fund B on 1 August 2018. Member One is in receipt of an account-based pension with a minimum pension amount of $10,000 for the 2018–19 financial year.

    The number of days from the beginning of the financial year (1 July 2018) to the day the pension is commuted (1 August 2018) is 32. The number of days from the commutation to the end of the financial year (30 June 2019) is 333.

    The Fund A Trustee is required to make a pro-rata minimum pension payment of $876.71 ($10,000 × 32 ÷ 365).

    The Fund B Trustee is required to make a pro-rata minimum pension payment of $9,123.29 ($10,000 × 333 ÷ 365).

    End of example

    Taxable and tax-free components

    Under paragraph 307-125(3)(d) of the ITAA 1997, the new income stream after an SFT will retain the same proportions of taxable and tax-free components as the original income stream.

    For super lump sums that did not arise as the result of a commutation of an income stream, the tax-free and taxable components are determined just before the SFT date.

    Social security treatment of income streams

    Information on the treatment of successor fund transfers for social security purposes can be found on the Guide to Social Security LawExternal Link.

    Following a successor fund transfer, income streams are generally reported as a continuation of the original income stream for social security purposes. This may be different than the reporting required for tax purposes. For information about reporting income streams to Services Australia if a successor fund transfer takes place, refer to Q14 on the Details of income stream product form (SA330External Link) or contact Services Australia through your usual channel.

    Defined benefit funds

    Reporting notional taxed contributions (NTC)

    A transferring fund will need to identify member accounts which are eligible for the grandfathering provisions that apply to a member's NTCs and advise the successor fund. The successor fund will need to ensure the grandfathering indicator is completed in the MAAS for these accounts.

    When the member's interest in the transferring fund ceases, the amount reported will be calculated pro-rata based on the SFT date.

    See also:

    Division 293 tax deferred debt

    If a transferring fund has received a notice from the ATO advising that a deferred debt account has been created, they should provide this notice to the successor fund to assist them in complying with their reporting obligations.

    The successor fund should provide us with details of members transferred to them with a deferred debt account. The details should include the name of the transferring and successor funds, member name and member account number and client identifier for the member in both the transferring and successor fund.

    An end benefit notice does not need to be provided in the case of an SFT.

    See also:

    Re-reporting

    Obligations

    Before the SFT date, the transferring and successor funds and their respective administrators must establish a plan for managing member reporting before, during and after the transition and identify any blackout periods where no reporting will occur. This includes an agreement as to the dates each fund will be responsible for re-reporting, regardless of which fund made the error or omission.

    The transferred members will be left in a difficult position if errors or omissions in reporting are discovered that cannot easily be rectified by re-reporting and there is no agreement in place between funds to manage these.

    The transferring fund's ABN should remain open as long as practicable during and after the transition, to allow the transferring fund or its administrator to correct previous reporting if required.

    If it is agreed that the successor fund and its administrator will make corrections to previous reporting, the transferring fund must ensure all appropriate access and permissions have been provided through Access Manager, while the transferring fund's ABN is still active.

    To make corrections to previous reporting, the successor fund’s administrator must use the same account identifiers initially used to report – that is, the original ABN, USI and member account number combination.

    Next step:

    • If necessary, the successor fund can lodge an enquiry through the Super Enquiry Service to reactivate an ABN.

    Information transfer

    The funds should also arrange for a data handover to occur to allow the successor fund and its administrator to obtain relevant member information and supporting documents from the transferring fund's administrator and retain access to these records for any corrections to reporting that may arise.

    Members who identify an error in reporting should be directed to contact the successor fund to request that the successor fund correct the error.

    If the successor fund's administrator does not have enough information to correct the error, the successor fund should first attempt to get that evidence from the member.

    See also:

    Data and payment standards

    The Superannuation Legislation Amendment (Stronger Super) Act 2012 established a framework to implement the data and payment standards that apply to processing rollovers and super contributions.

    Rollovers

    A transferring fund that pays a rollover super benefit, including a death benefit rollover, to a successor fund must provide the successor fund a statement in the approved form.

    See also:

    A rollover statement is not required when both funds share a common trustee. An SFT that involves the installation of a single trustee for the merging funds will avoid these reporting obligations.

    Another method to transfer information outside of the data standards may be used, which applies only:

    • to transfers to a 'successor fund' as defined in the Income Tax Assessment Act 1997
    • when both parties agree to use this method and not use the data standards.

    When these conditions are not satisfied, the SFT will be treated like any other rollover.

    For example, two super funds may already share a common administrator or a common registry platform and so the transfer may simply involve a formal change in the fund to which particular account data is attributed. Alternatively, a merger may only involve a change in ownership of a computing platform on which account records continue to be held.

    As with member-instigated rollovers, to ensure sufficient information is provided to allow correct treatment of the rollover benefit – funds will need to refer to:

    Updating product details

    Funds must provide rollover and contribution certification details of its products using the Fund Validation Service (FVS).

    Unique Superannuation Identifier (USI) details

    The trustee of the transferring and successor fund will need to provide or update USI details in line with the requirements outlined in the Lodge super product (FVSU).

    The transferring fund will need to end date its USI as a significant change using the FVS 28 days prior to the effective date. It is possible for a successor fund to retain a transferring fund's SPIN format USI. However, an ABN format USI cannot be transferred between funds.

    SPINs are administered by APIRExternal Link, an independent, privately owned company, and are subject to APIR rules. Funds considering retaining a SPIN should first contact APIR.

    To retain a transferring fund's SPIN format USI, after the transferring fund has end dated the SPIN format USI, the successor fund will need to lodge a new entry through the FVS with that SPIN format USI against the successor fund's ABN effective from the following day. Funds can lodge an enquiry through the Super Enquiry Service if there are any issues in updating the FVS.

    If a successor fund has retained a SPIN format USI from a transferring fund and the SPIN format USI will be later decommissioned, member accounts transferred under the SFT will need to be closed and opened again by the successor fund with the successor fund's USI.

    Payment information

    The transferring fund should communicate with employers to ensure future contributions are correctly directed to the successor fund. During the transition period, the successor fund may also need to contact any employers who have not yet updated their employees' fund details.

    As not all funds will hold employer contact details, communication to members should also include the new payment details to be passed on to their employer.

    Funds can also contact clearinghouses to inform them of the changes.

    Old bank accounts should be kept open during the transition period after the SFT to catch any trailing contributions and to avoid payments being rejected to the employer.

    Errors identified in product details

    As with member-instigated rollovers, any significant errors identified by a trustee will need to be immediately rectified – see Errors identified in the FDR.

    Notices and authorities

    In general, notices and authorities are only effective in relation to the trustee to which they were provided by the member, or on which a specific fund is named.

    If the SFT involves a change of trustee (and possibly even if the trustee remains the same), the validity of the notices and authorities held by the transferring fund in respect to its members will expire.

    Some taxation-related notices and authorities are discussed in more detail below; however this is not an exhaustive list.

    Next step:

    • lodge an enquiry through the Super Enquiry Service for any issues about other notices and authorities.

    TFN notices

    A transferring fund may report a new member account to the ATO and be returned an unmatched message response. We suggest the transferring fund follow through to action a 'Please Resolve' notice. If this is not possible before an SFT, the transferring fund should engage the successor fund to resolve the issue.

    TFN declaration

    A successor fund will not be required to obtain a new TFN declaration for a member who has previously provided this declaration to the transferring fund.

    PAYG withholding variation application

    A PAYG withholding variation application (both upward and downward variations) made to a transferring fund can continue to apply for the successor fund.

    The transferring fund will need to identify members who have made an application and advise the successor fund.

    Notice of intent (NOI) to claim or vary a deduction for personal super contributions

    The Income Tax Assessment Act 1997:

    • allows for a member to make a contribution to the transferring fund but provide a valid NOI to the successor fund (and receive acknowledgement of receipt of the NOI from a successor fund), even though the contribution was not made to the successor fund
    • allows for a member to make a contribution and provide a valid NOI to the transferring fund (and receive acknowledgement of receipt of the NOI from the transferring fund), but vary this NOI by giving the variation notice to the successor fund.
    • does not allow the successor fund to acknowledge a notice where an NOI is given to a transferring fund in the few days prior to the SFT occurring and an acknowledgment has not been issued by the transferring fund. – whilst the law requires the transferring fund to acknowledge a valid notice without delay, there may be a blackout period during which the transferring fund may recommend their members do not give them a NOI.

    If this situation does occur, however, the ATO are willing to accept that the original NOI was effectively not given; the member can give a new NOI to the successor fund and have it acknowledged. The transferring fund should prompt members if an NOI cannot be acknowledged.

    See also:

    Risk only accounts

    Where a member's interest in the successor fund is a risk only account with no investment component (zero balance), a member can provide a NOI to the successor fund in respect of contributions made to the transferring fund.

    Information transfer

    As the successor fund will not know if members made any contributions before the SFT in the same or previous financial year, the successor fund will require personal contribution data and details of the NOI process already completed (if any) at the time of SFT to determine what the member is entitled to claim or correct. This information is to be passed from the transferring fund to the successor fund in an SFT.

    Contributions splitting

    A member can generally lodge an application with their super fund to split their contributions (if the fund allows it) in the:

    • financial year immediately after the financial year in which the contributions were made
    • financial year the contributions were made – only if their entire benefit is being withdrawn before the end of that financial year as a rollover, transfer, lump sum benefit or combination of these.

    However, contributions can only be split by the trustee of the fund to whom the contributions were made. Once the SFT has occurred, the member has lost their opportunity to split their contribution with their spouse.

    As part of the notification sent to members by the transferring fund about an impending SFT, a reminder about contributions splitting should be included. Members will be prompted to give the trustee of the transferring fund a notice of intent (NOI) to split before the SFT, and the trustee will undertake the split as part of the SFT process.

    A NOI must be given to the trustee of the transferring fund before, or at the same time as, lodging a contributions splitting application.

    See also:

    Authorities

    Bankruptcy orders

    In an SFT where account freezing notices are current, the transferring trustee may need to await the outcome of the freezing notice, subject to any legal advice obtained by the trustee in relation to this issue.

    Binding death benefit nominations (BDBNs)

    All BDBNs attached to member accounts will need to be reviewed by both the transferring and successor fund to determine their validity and currency (most have a 3-year validity) before and after the SFT.

    If a member is a member of both the transferring fund and the successor fund, a new BDBN may need to be completed with the successor fund, dealing with both interests.

    Family law agreement, court order or consent order to split superannuation

    The transferring fund should inform the successor fund of any member’s account which is subject to an agreement or order to split super which has not been completed. It should also inform the successor fund of any un-actioned applications by ‘an eligible person’ for information about the super interest of a member.

    For defined benefit funds, Regulation 29 of the Family Law (Superannuation) Regulations 2001External Link applies to determine the gross value of defined benefit super interests for these purposes.

    Release authorities

    The transferring fund should notify members that due to the impending SFT, they should avoid electing release from the transferring fund as the transferring fund may not be able to action the release authority.

    A release authority issued to the transferring fund cannot be actioned by the successor fund.

    The transferring fund can lodge an enquiry through the Super Enquiry Service to request a suppression of release authorities during the blackout period. Post-SFT, a new release authority will be issued to the successor fund.

    Commissioner's commutation authorities (CCA)

    If a CCA is received by the transferring fund after the account has been closed, the transferring fund would need to report a CC2 event (unable to commute due to insufficient funds).

    We will then re-assess the member and take the next appropriate action. If the member is still in excess then a CCA may be issued to the successor fund.

    Fund income tax

    Fund income tax will impact upon member balances. Therefore, funds that are contemplating an SFT have an obligation to consider the tax impacts.

    Next step:

    • lodge an enquiry through the Super Enquiry Service for assistance with SFT issues (where your enquiry relates to fund income tax issues, it will be referred to the appropriate area in the ATO).

    No-TFN contributions income tax offset

    For the 2020-21 income year and later income years, a successor fund is entitled to claim the no-TFN tax offset if the following conditions are met:

    • tax was payable by the previous fund on an amount of no-TFN contributions in any of the previous three income years or relevant part year for the year in which the SFT occurred, and
    • the no-TFN contributions were made to the previous fund to provide superannuation benefits for an individual who has never quoted (for superannuation purposes) their TFN to the previous fund but has quoted their TFN to the successor fund for the first time in the current income year.

    The no-TFN tax offset is the total amount of the tax payable on amounts of no-TFN contributions for which both of the above conditions have been met.

    To allow the successor fund to accurately claim the no-TFN tax offset it is suggested that the transferring fund provides enough details of previous no-TFN contributions from the previous three income years prior to the SFT.

    Division 310 – loss relief for merging superannuation funds

    From 1 July 2020 the temporary tax relief for merging superannuation funds was made permanent. Since December 2008, tax relief under Division 310 of the Income Tax Assessment Act 1997 has been available for merging complying superannuation funds to transfer revenue and capital losses, and to defer taxation consequences on gains and losses from revenue and capital assets, subject to funds meeting certain conditions.

    How to obtain certainty that Division 310 requirements are met

    To obtain certainty that the Division 310 requirements have been met, you could seek a private binding ruling from the ATO's early engagement for advice service. We recommend you email PGIAdvice@ato.gov.au as soon as practicable after the decision to undertake the SFT is made to ensure we are in a position to provide advice well in advance of the SFT date.

    Checklist

    As the transferring fund:

    • notify members of SFT
    • establish plan with successor fund to determine the dates each fund will be responsible for making amendments and identify any reporting blackout periods
    • arrange for data handover to successor fund of all relevant member information and supporting documents required to make amendments
    • finalise reporting of member transactions/contributions up to the SFT date
    • provide successor fund all information on lost members
    • action any outstanding section 20C notices (unless there is a pending claim)
    • process pending disability and death benefits, or instruct the member/beneficiary to remove any certified Terminal Medical Condition benefit
    • provide data to successor fund for disability modification calculation
    • close old member accounts and advise successor fund once completed
    • provide rollover statement to successor fund (if required)
    • inform employers of new contributions details
    • keep old bank accounts to catch trailing contributions
    • end date USI 28 days prior to effective date – Fund Validation Service user guide
    • report relevant event type upon ceasing pension with date and value at SFT date
    • ensure minimum pension payments are met from start of income year to SFT date
    • provide reminder to members on outstanding notices/authorities and/or provide to successor fund (if relevant)
    • provide successor fund any ATO notice of deferred debt account.

    As the successor fund, you:

    • establish plan with transferring fund to determine the dates each fund will be responsible for making amendments and identify any reporting blackout periods
    • arrange for data handover from transferring fund of all relevant member information and supporting documents required to make amendments
    • open new member accounts shortly after transferring fund has closed old accounts
    • update member lost status based on information received from transferring fund
    • report SIS event upon commencing new pension with date and value at SFT date
    • ensure minimum pension payments are made from SFT date to end of income year
    • action any notices/authorities (where appropriate) provided by members/transferring fund.
      Last modified: 15 Sep 2021QC 56421