• Member contributions statements

    We currently collect information on the member contributions statement (MCS) to calculate entitlements and liabilities, such as government co-contributions (GCC) and ECT. We need you to report more information on the MCS so we can:

    • work out how much low income super contribution (LISC) your eligible members should receive, and the account into which it should be paid
    • display all your members’ accounts online
    • see which accounts are eligible for inter-fund consolidation
    • calculate Division 293 tax for your members who have certain income and contributions over $300,000.


    Do you need to provide an MCS for all members?

    You need to provide an MCS for members who held an interest in the fund at any time during the financial year, including inactive members.

    For example, this includes an MCS for your members:

    • who closed their account on or before 30 June
    • are in pension phase
    • have a zero balance (but were paid out as a benefit or rolled over to another fund)
    • who have insurance-only accounts.

    You need to report for all members who held an interest at any time during the reporting year – this includes exempt public sector schemes, approved deposit funds, and RSA providers.

    Is the date you report new fields on the MCS as at 30 June, or as at the time of preparing the MCS?

    Generally, if there is no clear direction given by us or implied within the context of the reporting requirement, then you should report the data element as it is known to you at the time you make a statement to us, such as the day you prepare the MCS or the date you extract data to start your annual MCS process.

    Following are some examples.

    • Contributions fields There is clear direction given by us in the MCS reporting specification and MCS protocol that these are reported on the basis of the financial year the contribution was received.
    • Account balance field – Stronger enforcement of reporting the 30 June balance.
    • Account status – Because there is no instruction to give the 30 June status, provide the best data available when you prepare the MCS.
    • Insurance indicator – Because there is no instruction to give the 30 June insurance status, provide the best data you have available when you prepare the MCS.
    • Last contribution date – Because there is no instruction to give the date of last contribution as at 30 June, provide the best data you have available when you prepare the MCS.

    There will not be any validation issues if you report zero contributions as at 30 June but at the same time report a last contribution date of sometime in August if contributions come in after 30 June.

    Do you report the same date each year for account phase?

    The instructions for account phase state the following.

    • Show whether a lump sum benefit has been paid or a pension or income stream has commenced and/or has been paid from this account during the financial year.
    • Provide the information for the actual year the pension phase or benefit phase first occurred – for example, a member has an account of which he had received a lump sum benefit payment from his account on 3 August 2010 and the account remains in accumulation phase.
    • For the 2013 financial year, you would report the value B at account phase and the date 03082010 at date pension phase or benefit payment phase commenced.
    • Regardless of how many other rollover/transfers or lump sum benefits occur after this date, you will always report the original date – that is, 03082010.
    • Report contributions as you do now to show us that the account is also in accumulation phase.
    • If the member began a pension on 1 August 2014, only then you would change Account Phase to the value P and Date pension phase or benefit payment phase commenced would be 01082014.

    Do you need to provide MCS for members with a zero balance?

    It's not the balance of an account that determines whether you have an obligation to give an MCS for a particular member – it’s whether that member held an interest in the fund at any time during the financial year. So you may need to report some members with a zero balance, but not others.

    For example, a person who becomes entitled to life and disability cover upon becoming a member of a super fund under the terms of that fund's trust deed has an interest in the fund despite the fact that their sponsor employer has not yet made contributions for them. An MCS reporting the various attributes of the account must be provided for this member despite the account's zero balance.

    Similarly, an insurance-only interest may be attached to an account into which contributions are made quarterly but are immediately consumed by equivalent premiums paid to an insurer. In this case, the account will have a zero balance at 30 June but must nevertheless be reported on an MCS.

    Conversely, where no insurance interest exists, an account with a zero balance may simply be set up in anticipation of future contributions that are not made before the end of the reporting period – an MCS should not be lodged for these zero balance accounts.

    Consider whether you need to maintain zero balance accounts – MySuper fees rules help protect members from unnecessary fees and charges.

    What is an interest?

    Interest in a fund refers to a distinct claim of any kind against a fund, whether it be proprietary in character or not.

    See also:

    What if you close accounts opened by employers for employees not eligible for super guarantee?

    An employer may provide a fund with an employee's personal details, but before the end of the financial year may not have made contributions for that employee. Because you are only required to report for members who held an interest in the fund during the financial year, you generally are not required to report these accounts. The only situation where you will be required to report these nil balance accounts will be where an insurance interest arose as soon as the account was opened, despite the fact that contributions have yet to be made.

    What about accounts that are insured for a specified time until a contribution is received?

    An account with no transactions and a nil balance but which otherwise indicates that the member has an 'insurance only' interest in the super fund requires that an MCS would be completed for that account. You would report a nil balance and no contributions, but would give some details of other attributes of the member's account.

    The presence of an insurance entitlement associated with the account would lead you to conclude that the member 'held an interest in the fund' during that year.

    Section 390-5 of Schedule 1 of the Taxation Administration Act 1953 (TAA) will require that an MCS be lodged.

    When do you need to implement the new member contributions specifications?

    Use version 9.0.0 of the MCS electronic reporting specification to lodge any MCS files – this includes amendments to previous years.

    The only significant changes between the final version and the final draft were to:

    • correct the Member Data Record data table in relation to the Insurance Indicator – the only possible values are Y and N, as the field definitions already indicated at 6.95
    • clarify special requirements for constitutionally protected funds for Employer Contributed Amounts at 6.106.

    The changes to the specification primarily support expanded MCS reporting in accordance with amendments to section 390-5 of Schedule 1 of the TAA – these amendments have now been enacted to authorise these changes.

    Amendments to the income tax legislation relevant to calculating the Div 293 tax have been enacted – however, applicable regulations have not been made. The impact for the MCS is the field ‘Notional employer contributions’, which is the label at which defined benefit funds need to report 'defined benefit contributions' as specified in the law. The method for calculating the 'defined benefit contributions' will be specified in the regulations. Once requirements for the calculation of this amount have been made law, instructions will be published and announced using a bulletin to be issued by the Software Industry Liaison Unit. These instructions will supplement the electronic reporting specification, but a new version of the specification will not be issued.

    The few requirements dependent upon this legislation are highlighted in the specification and are relevant only to defined benefit funds and constitutionally protected funds.

    Will the new specification apply to amendments and other lodgments for prior years?

    We will continue to use a single electronic reporting specification for all MCS lodgments, regardless of the financial year being reported, including amended MCS. This means you will need to implement reporting under the new specification version 9.0.0 to ensure an uninterrupted ability to correct errors in previous year's reporting within the required timeframes.

    How do the MCS changes apply to defined benefits funds?

    You need to lodge an MCS for all your members, regardless of any type of contributions received or notionally received – for example, you must provide an MCS for your members who are being paid lifetime pensions, and for members with deferred entitlements and no further accrual of contributions.

    This considerably increases the amount of data we collect from defined benefit funds. The type of data for each member will also change. We will continue to collect information about notional taxed contributions, but we also expect to collect new data about defined benefit contributions (which are referred to in the MCS as 'Notional employer contributions'). Depending on law changes, this will include a broader range of data, including notional contributions to both taxed and untaxed schemes. This data will support our assessment of Division 293 tax.

    Because the regulations are not currently available, we have only been able to include a placeholder in the published final copy of the MCS for notional employer contributions and have not been able to advise how this amount will be calculated.

    How do the changes affect accounts with insurance benefits?

    The new MCS helps us to identify accounts with insurance benefits. These are clearly displayed for your members when they use our online services.

    There are warnings on the display screens to alert your members to find out more about the benefits they may lose if they consolidate accounts with insurance – for example, a member might think that because their account balance is only $100, it is not worth very much. However, they may not realise the true value of any insurance benefits attached to the account. We encourage them to find out more so they can make an informed decision.

    Why do you need to provide a destination account in the PVA?

    You can elect whether or not to accept both GCC and LISC for your members. Making the election to accept both payment types will result in both GCC and LISC being made to you for your members. If you cannot accept either the GCC or the LISC, you can return the payment to us together with a Payment Variation Advice (PVA).

    Changes to the PVA specification require the inclusion of destination member account and provider details in the Amounts transfer-out data record for members that leave a fund. Earlier version of the PVA specification stated that a fund can provide this detail in the amounts transfer-out data record, allowing a fund to choose to provide this detail or not. The changes were included to align with other required changes for LISC.

    How do you report the member account number and your client identifier in the MCS?

    We will use the member account number and the client identifier you provide on the MCS to display information on our online services. To clearly show your members what accounts they have online, it is important that you provide them with the same member account number and client identifier.

    Our online services rely on you to report the same member account numbers and client identifiers in order to display your members' latest records. If you use different account numbers and client identifiers, or change the numbers in subsequent years, this can result in multiple accounts being displayed on our online services and cause confusion for your members. This may generate increased member contact to you.

    What if you are amending an MCS?

    When lodging an amended MCS, you need to ensure that the fields Provider member account number and Provider client identifier reported in the amendment are identical to those in the original MCS. If these fields in the amended MCS are not identical to the original lodgment, then duplicate reporting may occur. Our systems could treat the amended MCS as an original lodgment, creating two separate MCS records for your member for the same financial year. This could lead to your member being seen to have exceeded the contributions caps and incorrectly incurring a liability.

    What do SMSF trustees need to do?

    SMSFs give member information on the SMSF annual return (SAR), so a separate MCS is not necessary. Only a few new labels are created on the 2013 SAR, consistent with the MCS changes – you only need to complete these new labels if they are relevant to the members of your SMSF.

    How do you lodge MCS?

    You are no longer able to use the ECI to lodge MCS files for your members.

    You must use the new file transfer function in the Business Portal. The file transfer function has initially been deployed for lodging payment summary annual reports and TFN declarations. MCS may be lodged through the same function. We have provided a separate online test facility for software developers.

    How do you test and lodge MCS using the portal?

    You can use the portal for checking your files conform to the updated MCS specification and for lodging your MCS.

    When you use the file transfer function, you are able to upload a file to validate only or to validate and lodge. If you choose to opt in for email notifications when you lodge your MCS file, we will send you an email notification to advise the outcome of the validation and confirm your lodgment if there were no errors.

    Regardless of whether there were errors or warnings, or the test or lodgment was successful, a validation report will be made available for you to download using the same file transfer facility. The report will provide information about the lodgment and detail any warnings and errors detected with specific codes to identify the errors/warnings.

    Existing and new Business Portal administration users can safely grant access to their staff for the specific file types they are authorised to lodge or receive without revealing confidential accounting information about their business on the Business Portal.

    Next steps:

    You can submit a larger batch file than was previously possible using ECI. The upload time will vary with your file size, network speed and internet connection, and we strongly recommend you compress files before uploading – this will decrease the upload time by up to 90%.

    The benefits of using this new system include:

    • controlled security – managers set up permission for staff to lodge/see selected information only
    • larger batch file size capacity
    • simplicity of use.

    How long will it take to test or lodge an MCS file?

    There are two elements that together influence the client experience – the time to upload the file, and the time to validate the data and provide a report.

    • Upload time                    
      • upload time is strongly dependent on the client's network bandwidth and the amount of traffic on their network, as well as by file size
      • upload time can be dramatically reduced if the file is compressed before submitting (for example, a 5 GB file may compress to less than 100 MB).
    • Client experience                  
      • the user is locked in to the portal file transfer function while the upload is taking place, with an ATO reference number displayed when the upload is complete
      • at that point, the user can perform other functions on the portal or exit from the application while the file is being validated by our systems in the background.
    • Validation time – this is the time from when our systems receive the file until when the validation report and test/lodgment status is made available.

    Although we recommend that files are compressed before uploading to reduce the upload time, validation occurs on the uncompressed file and, as such, the validation time is dependent on the uncompressed file size and not the compressed file size. For example, a 5 GB file may compress to less than 100 MB zip file, so significantly reducing the upload time – however, it will still take three-and-a-half to four hours to validate.

    There will be a number of factors influencing validation performance on the day. Following are indicative timings for validation of large files – that is, from when the upload is complete until when the validation report and file status will be available:

    • 1GB file will take 45 minutes to one hour
    • 2GB file will take one-and-a-half to two hours
    • 3GB file will take two-and-a-half to three hours
    • 5GB file will take three-and-a-half to four hours
    • 8GB file will take five-and-a-half to seven hours.

    Most files will validate much more quickly than these times – when the additional data and inactive member reporting requirements for 2013 are factored in, 80% of the lodgments will be below 50 MB in size, and 99% of the lodgments will be below 5 GB.

    We are continuing the process of performance testing and tuning the new capability, and will monitor production performance throughout the peak lodgment periods.

    You do not need to stay connected to the portal while the validation takes place, and can choose when to connect to the portal to retrieve the report after validation has completed.

    When a file is submitted to be tested or lodged, you can opt in or out to receive a notification when the validation report is available. The email address entered will be used for all notifications for the organisation until it is updated by any user or until a user in the organisation elects to opt out of receiving notifications.

    Regardless if you are opted in or out of notifications, you can access the portal at any time to view the file status – that is, to see if the validation is still in progress or the status of the test/lodgment.

    How do software developers prepare for the updated MCS specification?

    Software developers can use our test facility on the software developers' home pageExternal Link This is an independent testing facility and does not look like the business portal – it will allow software developers to test if their software correctly extracts the expanded data for MCS files and that the files conform to the updated MCS specification.

    The test facility is intended for use by software developers to ensure their software produces files in the correct format. It is not intended for testing of full production datasets, and files submitted through the test facility should not exceed 50MB (uncompressed).

    Will you know if a lodgment doesn't work?

    The MCS lodgment has to pass through both a portal file transfer validation and an outcome of lodgment check before you will know if your attempted lodgment has been accepted. Most errors are picked up at the preliminary validation stage, but lodgment is not finally confirmed until an Outcome of Lodgment Report (OOLR) is received.

    The file transfer function at the portal produces a validation report – we recommend you opt in to receive an email notification when this is available. The notification is sent to the email address entered when a file was last submitted using the portal file transfer function by anybody in your organisation.

    You will be familiar with the OOLR from MCS lodgments in previous years. You will receive an OOLR for your MCS, even if there are no errors. If there are no errors, only a report summary and list of the accepted lodgments will be issued. If errors are identified, then a summary of error codes and their descriptions are available in the file, in the Error code, Error description and Impact of error fields. The error list assists in working out exactly what caused individual member records on a statement/report to be rejected.

    See also

    • For more specific details about the OOLR errors codes and format of the electronic report file, refer to the Outcome of lodgment report Error Manual and Outcome of lodgment report electronic reporting specification at softwaredevelopers.ato.gov.auExternal Link

    How do you access the file transfer function in the Business Portal?

    You need to:

    • access the Business Portal
    • navigate to File Transfer located in the left-hand menu.

    You can access the Business Portal using the same AUSkey as you use to lodge files via ECI. If you are either an administrator or a standard user, you will be able to lodge MCS via the portal.

    If you are a Standard AUSkey holder, your AUSkey administrator will need to use Access Manager to grant you permission to lodge the appropriate file types – for example, MCS. There is not one overarching permission to control access to the file transfer function, but rather there are different permissions controlling each file type.

    As long as a user has permission to test or lodge any type of file, they will be able to access the file transfer function. If they attempt to send a file for which they are not authorised, the test/lodgment will be rejected, with an 'unauthorised' error reported in the validation report.

    To enable a standard AUSkey holder to test an MCS file, they will need to be granted the 'Prepare' permission for the MCS, and to enable them to lodge an MCS file they will need to be granted the 'Lodge' permission.

    The MCS permissions are available in Access Manager in the portal.

    See also:

    • File transfer provides more information about lodging through the Business Portal.

    Funds with less than 20 members may use a paper form.

    How do you report rollovers between funds?

    At the request of industry, we have changed the way contributions are reported when a rollover occurs. This means that for rollover payments, you do not provide current-year contribution information on an RBS.

    You simply need to report all contributions you have received on the MCS for all accounts held during the year, including those that have closed during the year. This change will apply to the 2013–14 MCS for MCS due on or before 31 October 2014. You need to be ready to use the new RBS form.

    See also:

    What isn't decided

    Amendments to the income tax regulations relevant to calculating Division 293 tax have not yet been made. The impact for the MCS is the field Notional Employer Contributions, which is completed only for members with a defined benefit interest – for other members, the field will be always be zero-filled.

    Once requirements for the calculation of this amount have been made, instructions will be published and announced using a bulletin to be issued by the Software Industry Liaison Unit. These instructions will supplement the electronic reporting specification but a new version of the specification will not be issued.

    Defined benefit funds will still need to lodge the MCS for all members with a super interest during the 2012–13 financial year. You will need to zero-fill the 'Notional employer contributions' field if you are not in a position to calculate it by then.

    See also:

    • Instructions for defined benefit funds should be directed to the Software Industry Liaison Unit at SIPO@ato.gov.au
      Last modified: 02 Nov 2016QC 25355