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  • Superannuation Communique July 2017

    11 July 2017

    In this month's edition:

    Summary of recent changes

    During the past month we sent alerts reminding you of things you needed to do or be aware of before the super changes began on 1 July. Here are some of the alerts we sent you.

    See also:

    Commissioner of Taxation National Press Club address

    On 5 July, Commissioner of Taxation Chris Jordan addressed the National Press Club on the state of Australia’s tax and super systems.

    In his speech, the Commissioner covered the following topics:

    • plans to make the tax experience quicker and less painful for Australians
    • reforms to make the tax and super systems stronger, fairer and more contemporary
    • the need to influence community perceptions and attitudes about tax
    • publishing and minimising tax gaps across all segments, with the first segment being the large market corporate tax gap
    • other markets and activities where extra attention is now warranted, including small business, the black economy, phoenix activity and the individuals market. 

    He also discussed Operation Elbrus and the ATO IT issues experienced over the past six months. The Commissioner acknowledged their impact on the tax profession and the super and software industries, as well as the ATO’s standing in the community.

    See also:

    Defined benefit funds – avoid end benefit cap calculations

    From 1 July, super funds can send a request to the Commissioner to find out if a member's Division 293 deferred debt account is in debt. If it isn't, you don't have to calculate an end benefit cap when a member requests payment of an end benefit.

    You still need to send an end benefit notice to the Commissioner regardless of whether the member's account is in debt.

    How to make a Division 293 deferred debt account status request

    You can make the request by:

    OR

    • emailing SuperCRT@ato.gov.au and arrange to submit your request and information through the secure Data Transfer Facility (DTF).

    What information do you need to provide?

    Step 1: Provide the following information:

    Contact information
    • Fund name
    • Fund ABN
    • First and last name of the person making the request (must be an authorised contact of the fund)
    • Position held
    • Business hours phone number
    Member's information
    • Account number
    • First and last name of the member
    • Date of birth
    • Address

    Step 2: Provide one of the following declarations:  

    If the request is received via unencrypted email:
    I declare that the information in this email is true and correct. I understand that the ATO does not control the path of inbound emails, so the privacy of information sent by unencrypted email cannot be guaranteed. I am aware of this risk when I choose to communicate with the ATO via email.
    If the request is via Data Transfer Facility:
    I declare that the information given in this request is true and correct.

    Once your request has been received, the Commissioner will respond within five business days advising whether your member’s Division 293 deferred debt account is in debt.

    If the account is not in debt you will be directed to write the words ‘Not Applicable’ on the End Benefit Notice at Question 14, next to 'What is the end benefit cap amount?'.

    If the account is in debt, you will be required to calculate the end benefit cap as usual.

    See also:

    SuperStream – update on the future of fund reporting

    In this section:

    B2G reporting update

    The business-to-government (B2G) reporting part of the SuperStream implementation involves the redesign of three primary statements APRA-regulated funds must report to us:

    1. Unclaimed Super Money Statement (USMS)
    2. Lost Members Statement (LMS)
    3. Member Contributions Statement (MCS).

    It is one of the last products scheduled under SuperStream, which seeks to improve and streamline how funds report member information.

    The rollover message v2.0 will replace the current USMS for unclaimed accounts and for the transfer of former temporary residents. As part of B2G reporting:

    • unclaimed member accounts will be transferred biannually using the rollover transaction request (RTR)
    • Section 20C notices (s 20C) will be replaced by the initiate rollover request (IRR)
    • cutover and implementation of the USMS 
    • B2G will be in April 2018.

    The design was incorporated into v2.0 of the rollover message to allow for the notification of the former temporary resident (s  20C via an IRR) and to allow the fund to respond. Funds transfer unclaimed accounts to us via a rollover transaction request (RTR). This means the USM statement is replaced by reusing the rollover message.

    Unclaimed superannuation money walk-through

    In order to get ready to test the new processes for sending and receiving USM, we've started discussions with the super industry and after this we will provide key dates as we develop the schedule.

    In late July we'll host a walk-through with key industry representatives to cover our business processes and, in particular, how amendment processes will work (as these are out of scope for data standards). The walk-through will cover:

    • the different decreased and increased amendment processes
    • new validations rule changes, which will help to reduce reverse workflows.

    We'll provide more information after the walk-through to the wider industry on the business processes. 

    If we change or develop new processes, we'll include them in an updated version of the rollover user guide, which we'd like to release in late August or September.

    Member Account Attribute Service (MAAS)

    MAAS is the new name for what was previously referred to as the Member information eXchange (or MiX) web service. While we’ve changed the name to more accurately reflect the function of the new reporting-to-government framework, the design is the same.

    This service will allow funds to report changes to a member’s account when they occur. These changes can include:

    • when an account is opened or closed
    • the lost status of the account (replaces the separate LMS)
    • the phase of the account (accumulation or retirement)
    • what indicators are linked to the account (for example, whether insurance cover is attached to the account)
    • what transactions accounts can receive (for example, whether an account can receive co-contribution and LISTO payments from us).

    In June 2017 we sent the MAAS Business Implementation Guide (BIG) to key industry stakeholders for feedback.

    We have received the feedback and are now working through it before publishing an updated MAAS BIG document.

    A legislative instrument moving certain reporting requirements to the MAAS is being drafted and will be available for feedback later this month.

    The MAAS service will begin from April 2018 with an extended cutover period through to October 2018.

    Member Account Transaction Service (MATS)

    In late 2016, together with industry, we reviewed the current environment and identified some super-related changes that looked into whether the original reporting redesign was an up-to-date solution that would meet the future needs of both industry and government.

    Since then we've worked closely with industry to co-design a new reporting approach to:

    • better integrate the requirements of the 2016 Budget changes with other super industry reforms
    • provide better outcomes for the overall super system and government policy direction
    • ensure an improved member experience in the way they interact in the super system.

    The co-design of the MATS in partnership with industry is going well. We continue to consult with a small industry group to work through how a shift from annual aggregated reporting to more frequent event-based reporting will work. We will provide more detailed information later this month, but in the meantime the event-based reporting webinar materials mentioned below provide an overview of the proposed MATS design.

    Event-based reporting webinar recording available

    In June, we hosted a webinar about the event-based reporting solution to provide you with details of the MATS we're developing in consultation with industry.

    The webinar, hosted by Tracie Crowden from the Reporting-to-Government Changes team, provided participants with an overview of the future of superannuation reporting, which includes the redesign of the MCS.

    A survey of webinar participants indicated they found the webinar useful and said it helped them better understand the MATS.

    If you missed the webinar you can now watch a recording and view the presentation slides on our website.

    Next step:

    See also:

    Updates coming for super changes law companion guidelines

    The Treasury Laws Amendment (2017 Measures No. 2) Bill, which received royal assent on 22 June 2017, makes some minor and technical amendments to the 2016 superannuation changes package.

    These amendments include a new transfer balance credit coming from the repayment of a limited recourse borrowing arrangement and changes to the treatment of transition to retirement income streams.

    We will be updating our law companion guidelines on the super reforms over the coming weeks, where appropriate, to reflect these amendments.

    Decommissioning the super guarantee legacy system

    Thank you for your support as we make changes to our super guarantee (SG) processing systems. In recent months, we have worked to finalise all processing to decommission our legacy system.

    We would like to thank you for your ongoing support in helping us with the provision of information, timely lodgment of payment variation advice (PVA) forms, presentation of cheques and verification of transactions to allow reconciliation of super fund records.

    We have also been in contact with funds recently to ensure PVA forms for SG legacy are lodged on time. If you have any outstanding PVA forms or payments, please send them to us as soon as possible.

    There's still time to have your say on the design of Single Touch Payroll

    Single Touch Payroll is a reporting change for employees with 20 or more employees.

    Employers will need to report payments such as salaries and wages, pay as you go (PAYG) withholding and super information to us straight from their payroll solution at the same time they pay their employees.

    We've released a consultation paper to get your feedback on the online choice of fund design, which is part of the employee commencement service in Single Touch Payroll.

    Through this consultation paper, we want your feedback on:

    • the principles supporting the online design for choice of fund
    • whether the ATO design achieves the stated policy intent
    • how to support a more efficient member and employer experience (ie through both ATO online and employer business management software solutions).

    We held a walk-through webinar on Tuesday 4 July. If you registered but couldn’t attend, we’ll send you an email with a link to the recording of the event when it is available.

    Next step:

    See also:

    Use SuperMatch2 to claim your member's super

    You don't need to use the provider claim form to claim your member's ATO-held super. SuperMatch2 allows you to submit a single or bulk file request to have your members' funds transferred straight into their accounts.

    SuperMatch2 provides you with information about member accounts and ATO-held super including super guarantee and co-contributions. Using the service signifies your acceptance of the terms and conditions. You don’t need to sign a paper agreement.

    Next step:

    See also:

    Data messages for USM responses

    When providing an outcome response at the member level for a USM rollover the context ID field is a mandatory requirement.

    • Where this is not provided the data message will fail validation.
    • Without the context ID we are unable to match the outcome response message to the member, resulting in the money not being returned to their account and then redistributed to another destination.

    See also:

    USI account name via the Business Portal

    In response to your feedback we improved the way your unique superannuation identifier (USI) account appears in the Business Portal.

    When you add a new USI or modify an existing USI via the Fund Validation Service the product name will now be displayed in the Business Portal.

    Contributions testing update

    In this section:

    Last week marked week 11 of fund testing, which has progressed well with 16 funds now finished. Eight of these funds are also participating in business deployment verification (BDV). 

    With just over seven weeks to go before the 31 August 2017 conformance date, we'll be working closely with funds that are yet to start testing to confirm their readiness. This is to ensure we can complete the government contribution testing and implementation within that timeframe.

    BDV update

    As of 30 June, the following government contribution payments have gone through the BDV exercise:

    • co-contributions remittance
    • superannuation guarantee (SG) remittance
    • superannuation holding account (SHA) remittance; and
    • low income superannuation contributions (LISC) remittance.

    SG and co-contributions recovery messages have not been sent due to an issue with our outbound channel. The recovery messages that are affected by this issue are relatively minor (only 10 messages). We deployed a fix for this issue last week and will be able to test this once we've reconciled the most recent LISC recovery run.

    The LISC recovery run of 6 July was the final process in our BDV exercise. Once we have reconciled this final process, we will be able to confirm that all seven government contributions payments and recovery processes are working in line with data and payment standards.

    Note that funds not participating in BDV have continued to receive payments and recovery messages through the existing legacy channel.

    Dual channel issue

    During BDV, funds reported during BDV instances where they had received government contributions via the previous legacy channel even though their particular USI was certified to accept government contributions through SuperStream. This issue has also been referred to as the dual channel issue. A fix for this issue was recently deployed and will be confirmed after this week's co-contributions remittance run.

    Government contributions to proceed to full deployment in SuperStream

    On the basis of our successful BDV with selected funds, we have decided to continue to full deployment of government contributions in the SuperStream standard.

    We are confident the fixes we've deployed for the recoveries and dual channel issues referred to above will be verified as successful before the formal completion of the BDV exercise in mid-July.

    Further improvements in place

    We have system performance enhancements scheduled and being progressively implemented to ensure the load requirements are met for the peak periods for contributions between September and December this year.

    Continue with your test plans

    Funds still testing should continue to do so until they are satisfied they are ready to self-certify for contributions v2.0. When ready, you should update your certification status on the Fund Validation Service and submit your production readiness checklists to us.

    It is important that funds make every effort to meet their nominated test window. Any requests to defer testing will require justification as it impacts on industry testing overall.

    31 August conformance date for error response messaging

    The due date is 31 August 2017 to implement business-to-business (B2B) error response messaging. A large number of funds have yet to complete their error response message implementations. We encouraged you to keep us informed if your implementation plans change. We'll also look to engage those funds over the coming month to confirm that original implementation plans are still on track.

    Please note that funds who have not implemented B2B error response messaging by 31 August must report this to APRA as a breach.

    Support employers to become SuperStream ready

    The majority of employers are now sending SuperStream compliant contribution transactions, but we encourage funds to continue to work with employers (who are yet to implement a compliant solution) to do so as soon as possible.

    Some employers making super contribution payments by BPAY or EFT think they are SuperStream compliant, but are not sending the mandatory data in the required format. To be SuperStream compliant there are a number of options available, including our Small Business Superannuation Clearing House for eligible employers.

    See also:

    Next steps:

    Changes ahead for reporting death benefit rollovers and SuperStream deliverables

    Recently we wrote to fund trustees to provide advice on steps they need to take to prepare for reporting changes to death benefit rollovers and readiness for business-to-government (B2G) SuperStream deliverables.

    The letter contained two attachments with important information about what funds need to do to prepare.

    Death benefit rollover changes

    There's been a law change on the definition of a 'rollover superannuation benefit'. This law change allows a super lump sum death benefit to be rolled over where the beneficiary is a dependant and eligible to receive a death benefit income stream under super law.

    These changes need all funds to identify that they are paying a death benefit income stream. To support trustees in meeting these new requirements short-term arrangements will be introduced from 1 July 2017. These arrangements will be in place until there is an update to the SuperStream standard to support death benefit rollovers between APRA-regulated funds. We are continuing to work with industry to figure out the timing to update SuperStream.

    Action required for processing a death benefit rollovers

    The short-term arrangements allow a transferring fund, before processing a death benefit rollover, to check that the receiving fund will accept the rollover. Under the arrangements, after confirmation that the receiving fund will accept the death benefit rollover: 

    • if the transferring fund is able to stop both the data and payment of the death benefit rollover from being sent to the receiving fund using SuperStream, the fund should process the rollover manually using a new paper death benefit rollover statement and cheque payment sent to the receiving fund
    • if the transferring fund is not able to stop a death benefit rollover from being sent to the receiving fund using SuperStream, the fund should contact the receiving fund before processing the rollover – as soon as practicable after processing the rollover using SuperStream, the transferring fund must complete the new paper death benefit rollover and send this to the receiving fund.

    You should use the fund contact information contained in the Fund Validation Service to contact the receiving fund. Please review your fund's contact information and ensure you have internal processes set up to refer the death benefit rollover and related queries to the correct team or contact person.

    SuperStream readiness

    We have started planning with industry to support implementation for the next phase of B2G SuperStream deliverables. To help us with the necessary preparations to support you through these changes, we are seeking advice on your readiness dates for each of the following B2G SuperStream activities.

    • Transfer of former temporary residents (Section 20C notices (s 20C)) from us to funds. You need to be ready to receive s 20C notices from us in February and August 2018 to handle response messaging.
    • Transfer of unclaimed superannuation money (USM) from funds to us, which occurs in response to an s 20C notice, as well as those accounts deemed unclaimed on the unclaimed money day and due in April and October 2018.
    • Member Account Attributes Service (MAAS) for funds to report changes to a member's account when it occurs. The MAAS service will begin from April 2018 with an extended cutover period through to October 2018.

    Action required for each B2G SuperStream deliverable

    • Complete the readiness notification template indicating the dates by which you expect to be ready to test and begin production activities for each of the deliverables. Note: you may need to consult with your software developer or service provider to provide some of these dates.
    • Where the testing or readiness dates are different for each of your unique super identifier (USI) products, list them separately on this form.
    • Submit the completed form to SuperStreamStandards@ato.gov.au by 31 July 2017.

    More information

    No-TFN withholding for capped defined benefit income streams

    There has been confusion about how to interpret information relating to how superannuation funds should withhold tax for capped defined benefit income streams where members have not provided a tax file number in Schedule 13 – tax table for superannuation income streams.

    • To understand how to apply the no-TFN withholding rate
      • the phrase ‘taxable component’ in this section of Schedule 13 should be interpreted broadly to mean the parts of income streams subject to taxation.
    • Under previous rules
      • both the tax-free and taxed elements of a defined benefit income stream were non-assessable, non-exempt income for an individual 60 or over. This means these elements were not subject to taxation and funds were not required to withhold any amounts.
    • Under the new rules from 1 July 2017
      • you still don't need to apply the no-TFN withholding rate to any of these parts of a capped defined benefit income stream if a member is 60 or over and the total of these amounts is below the defined benefit income cap.

    The requirement to withhold and apply the no-TFN tax to any un-taxed element of the taxable component remains unchanged as this remains a part of the income stream subject to taxation.

    Taxable component descriptions

    Individuals under 60

    For income streams paid to individuals under 60, ‘taxable component’ comprises both the taxed and untaxed elements of the income stream.

    Individuals over 60

    For capped defined benefit income streams paid to individuals 60 or over the ‘taxable component’ will comprise:

    • 50 per cent of the total of the tax-free plus taxed element that is over the defined benefit income cap, and
    • any untaxed element.

    TFN declarations

    Super providers who do not hold a member’s TFN will need to obtain a TFN declaration from the member if they are:

    • 60 or over and receiving a capped defined benefit income stream that exceeds the defined benefit income cap, or
    • under 60 and receiving a reversionary income stream payable to a member aged over 60 at the time of death.

    See also:

    DASP changes for working holiday makers have taken effect

    From 1 July 2017, super providers making a departing Australia superannuation payment (DASP) are required to identify if those payments include amounts attributable to super contributions made while the applicant was a working holiday maker (WHM).

    To help you do this, the DASP online application system was updated on 26 June 2017 to allow applicants to enter visa information.

    If you have applications lodged before 26 June 2017, but you have not processed them in time to make a payment before 1 July 2017, you will need visa information to determine the appropriate DASP tax rate(s) to apply to the payment.

    How you can identify applications from WHMs

    DASP applications may or may not contain visa information depending on what the applicants have entered on their application.

    • If there is no visa information in the DASP application and the application was lodged on or after 26 June 2017, you can assume that the applicant was not a WHM. You can process the DASP application and apply the ordinary DASP tax rates.
    • If there is visa information in the DASP application, check whether the visas listed include a subclass 417 (working holiday) visa and/or a subclass 462 (work and holiday) visa and/or related bridging visa.
    • If there are bridging visas listed in the application, you will need to determine if the bridging visa listed is considered a WHM bridging visa. Refer to the bridging visa table for guidance.
    • If there are any subclass 417, subclass 462 and/or WHM bridging visas present, the applicant was a WHM, and you will need to check whether the DASP includes amounts attributable to super contributions made while the applicant was a WHM to determine the appropriate DASP tax rates.
    • If the DASP includes such amounts you will need to apply the WHM DASP tax rate in relation to the payment.
    • If none of these visas are present, the applicant was not a WHM and may have entered other visas (not a subclass 417 or 462) in error. You need to process the DASP application and apply the ordinary DASP tax rates.

    PAYG specifications

    The proposed change to add ‘DASP type’ to the DASP Payment Summary to indicate when a DASP has been taxed at the WHM tax rate has been removed.

    See also:

    Monthly super remittance and recovery processing schedule

    The ATO super processing schedules for July and August 2017 are outlined below. This reflects the channel, the files, and payments that will be sent through for each specific product.

    Table 1 – July 2017 SuperStream

    SuperStream

    Date from

    LISC Recovery

    Thursday 6 July

    USM Remittance

    Friday 7 July

    Co-Contributions Remittance

    Tuesday 11 July

    SG Recovery

    Tuesday 18 July

    SG Remittance

    Tuesday 18 July

    SHAsa Remittance

    Thursday 20 July

    USM Remittance

    Friday 21 July

    LISC Remittance

    Tuesday 22 July

    Co-Contributions Recovery

    Tuesday 1 August

    Table 2 – July 2017 ECI/Paper

    ECI/Paper

    Week commencing

    LISC Recovery

    Monday 10 July

    USM Remittance

    Monday 10 July

    First Home Saver Account Remittance

    Monday 10 July

    Co-Contributions Remittance

    Monday 10 July

    USM Recovery

    Monday 17 July

    SG Recovery

    Monday 17 July

    SG Remittance

    Monday 17 July

    SHAsa Remittance

    Monday 24 July

    USM Remittance

    Monday 24 July

    LISC Remittance

    Monday 24 July

    Co-Contributions Recovery

    Monday 31 July

    Table 3 – August 2017 SuperStream

    SuperStream

    Date from

    LISC Recovery

    Thursday 03 August

    USM Remittance

    Friday 04 August

    Co-Contributions Remittance

    Tuesday 08 August

    SG Recovery

    Tuesday 15 August

    SG Remittance

    Tuesday 15 August

    SHAsa Remittance

    Thursday 17 August

    USM Remittance

    Friday 18 August

    LISC Remittance

    Tuesday 22 August

    Co-Contributions Recovery

    Tuesday 29 August

    LISC Recovery

    Thursday 31 August

    USM Remittance

    Friday 01 September

    Table 4 – August 2017 ECI/Paper

    ECI/Paper

    Week commencing

    LISC Recovery

    Monday 07 August

    First Home Saver Account Remittance

    Monday 07 August

    USM Remittance

    Monday 07 August

    Co-Contributions Remittance

    Monday 07 August

    USM Recovery

    Monday 14 August

    SG Recovery

    Monday 14 August

    SG Remittance

    Monday 14 August

    SHAsa Remittance

    Monday 21 August

    USM Remittance

    Monday 21 August

    LISC Remittance

    Monday 21 August

    Co-Contributions Recovery

    Monday 28 August

    LISC Recovery

    Monday 04 September

    First Home Saver Account Remittance

    Monday 04 September

    USM Remittance

    Monday 04 September

    Super consultation report

    Here is the consultation report for the previous month and for the next month. Send your feedback or questions to SuperConsultation@ato.gov.au.

    Visit Let's TalkExternal Link for a complete picture of all superannuation consultation and engagement activities.

    Table 5 – June recap SuperStream

    Date

    SuperStream

    1, 15 and 29 June

    Contributions Implementation Working Group, (PHU)

    1, 15 and 22 June

    Transaction Service Working Group

    2 June

    SuperStream Continuous Improvement Working Group

    5 and 21 June

    SuperStream Reference Group, telepresence

    15 June

    SuperStream Technical Committee, Sydney

    29 June

    SuperStream Technical Committee, telepresence

    Table 6 – June recap Single Touch Payroll (STP)

    Date

    Single Touch Payroll (STP)

    1 June

    SuperStream Readiness Working Group

    6 June

    ATO open forum, Darwin

    7 June

    ATO open forum, Melbourne

    13 June

    Super changes webinar: Low Income Superannuation Tax Offset Measure/Personal Superannuation Contributions Deductions and Spouse Tax Offset

    14 June

    ATO open forum, Brisbane

    14 June

    Technical Working Group

    15 June

    Design Working Group Telepresence

    15 June

    ATO open forum, Toowoomba

    21 June

    Tax Practitioners Seminar, Canberra

    Table 7 – June recap super experience consultation

    Date

    Super experience consultation or engagement activity

    6 June

    Super Changes APRA Fund Consultation Group

    9 and 23 June

    Superannuation Changes Communication Committee

    27 June

    Super Changes APRA Fund Consultation Group

    28 June

    Super Reform Program Board

    Table 8 – July upcoming events APRA-regulated fund consultation

    Date

    APRA-regulated fund consultation or engagement activity

    7 July

    SuperStream Continuous Improvement Working Group

    12 July

    SuperStream Technical Committee (SSTC), Sydney

    13 July

    Contributions Implementation Working Group

    14 July

    Transaction Service Working Group

    26 July

    SuperStream Technical Committee (SSTC), telepresence

    27 July

    Contributions Implementation Working Group

    27 July

    Walkthrough of the Business-to-Government (B2G), unclaimed super money (USM) and Member Account Attribute Service

    TBC

    RDF Survey will be open for two weeks. On completion funds will be identified who we will consult with on the redesign of the RDF

    TBC

    Phone hook-up with state trustees regarding the transfer balance cap and structured settlement contributions

      Last modified: 19 Jul 2017QC 52932