Forman Financial Services

Rollover of Super Funds

From October 2021 it’s mandatory for self managed super funds to rollover using the SuperStream system.  In this article we will look at what is SuperStream and how this process works.

What is SuperStream and when will it apply to SMSF rollovers?

SuperStream is a data and payment standard used by super funds, employers and the ATO to send and receive contributions, rollovers and release authority information, and associated payments, electronically and within certain timeframes.

SMSFs are already required to use SuperStream to accept employer contributions from unrelated employers. With SuperStream now being extended to SMSF rollovers, any rollovers (except those involving an in-specie transfer of assets) to or from an SMSF on or after 1 October 2021 must be done using SuperStream. This includes rollovers between an SMSF and an APRA regulated fund, and rollovers between two SMSFs.

This change means that many more SMSFs will need to take steps to ensure they are SuperStream ready by the time a rollover is paid or received.

What steps does an SMSF need to take to be able pay or receive a rollover using SuperStream?

To be able to comply with SuperStream, an SMSF will need the following:

  • An electronic service address (ESA)
  • An Australian Business Number (ABN)3, and
  • To ensure its details held by the ATO (including its bank account details, and its ESA) are up-to-date.

SMSF trustees can update their ATO held details via www.abr.gov.au, via their registered tax agent, by phoning the ATO or completing a change of details form. Refer to this ATO page for further information.

What is an ESA?

An ESA is an alias that represents the URL or IP address of a messaging provider. Having an ESA allows an SMSF to send and receive information electronically across the super network. For rollovers, an ESA allows all information about the rollover (eg, what would have otherwise been provided in a rollover benefit statement) to be sent between funds electronically and in the correct format as a data message.

An SMSF may have or be able to get an ESA through its administrator, tax agent, accountant or bank. Alternatively, it can get an ESA by registering with an SMSF messaging provider. A list of SMSF messaging providers (as well as whether the providers allow for rollovers) can be found in the ATO’s register of SMSF messaging providers.

How is the rollover money paid via SuperStream?

While an ESA assists an SMSF to send or receive rollover information as a data message, the rollover payment is made electronically via the banking system. This payment is linked to the rollover data message via a unique payment reference number so that the paying and receiving fund can match the payment to the data message.

When an SMSF receives a rollover via SuperStream, the payment must be made to the SMSF bank account that is held on file by the ATO (as this is the bank account that the transferring fund will have confirmed in the ATO’s records).

What else is required prior to paying a rollover from an SMSF?
In addition to using SuperStream, SMSF trustees must do the following before processing a rollover:

  • Use the SMSFmemberTICK system to validate the member’s TFN.
  • Either:
    • Use the SMSF Verification Service (SVS) to verify fund and member details when rolling to another SMSF.
    • Use the Fund Validation Service to verify the fund details when rolling to an APRA regulated fund.

These steps allow the SMSF trustee to confirm details about the member and the fund to which the rollover will be paid.

The SMSF can then make the rollover via SuperStream no later than three business days after receiving all the information required to process the request. For this reason it will be important for the SMSF trustee to prepare to rollover well in advance of any member making a formal request. For example, to process a rollover a trustee would generally need to prepare an interim set of accounts to value the member’s interest and calculate the tax components of the rollover – which can take some time depending on the circumstances.

When the rollover is a death benefit rollover and the recipient is a dependent adult or child beneficiary, the SMSF must also give a death benefit rollover statement to the dependant beneficiary, within 30 days of the rollover payment.

For further information about these requirements, refer to the ‘Rollovers’ page on the ATO website. Where an APRA regulated fund pays a rollover to an SMSF, it must undertake similar requirements before making the rollover via SuperStream.

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Disclaimer and Warning
The information above is of a general nature only.  It should not be used as a source to make financial decisions.  It’s also important to note that the legislation and figures related to this topic tend to change regularly and therefore the information above may not reflect the current status.  We recommend that if you are looking for advice on this matter, you should contact us.