The ATO has recently announced a temporary measure to assist SMSFs with rollovers from a SMSF and between SMSFs. SMSFs have been having issues with obtaining an electronic service address (ESA) to facilitate rollovers to and from the fund and in certain situations the ATO may provide permission to perform the rollover outside of SuperStream. However, this will not apply to all rollover scenarios, specifically the most common rollover scenario.
Which funds have to comply with SuperStream for a rollover?
The ATO has noted that whilst the receiving fund must be able to accept an electronic rollover, the obligation to undertake an electronic rollover in SuperStream is with the transferring fund, not the sending fund. Accepting a roll in of member benefits outside of SuperStream, where it is in the best interest of the member, is acceptable1.
What’s been the problem?
An SMSF has been required to affect a rollover to or from the fund via SuperStream since 1 October 2021. To comply with these rules and enable rollover data to be sent electronically between the funds via SuperStream, an SMSF must have an electronic service address (ESA) that offers SuperStream rollover services.
A list of SMSF messaging providers that offer an ESA for SuperStream rollover services is available on the ATO’s website (QC 47550). At the time of writing, other than the three major SMSF administration and compliance platform providers, there is only one provider that is SuperStream rollover capable, that does not require the fund to use an administration platform2. This non-admin platform provider solution has an annual fee for this service. There is one other non-admin platform provider who has had the status of ‘In progress’3 since the start of SuperStream rollover requirement for SMSFs.
So, the problem has been that unless the SMSF is administered on one of the three major administration platforms, there is currently only one SuperStream rollover capable ESA option, at a cost.
ATO temporary relief….for some rollovers
Given the difficulty for some SMSFs to obtain an ESA to facilitate a rollover, the ATO has implemented temporary relief to allow the following rollovers to occur outside of SuperStream:
- Rollover between SMSFs;
- Rollover from an SMSF to an APRA regulated fund.
However, those SMSFs that do encounter difficulties in obtaining a SuperStream rollover capable ESA to facilitate one of the above rollover scenarios, must first contact the ATO (phone: 13 10 20 and select fast key codes 4 then 1) to obtain agreement from them to perform the rollover outside of SuperStream.
Importantly, the temporary relief process is only available for rollovers from a SMSF and between SMSFs. When the SMSF has issues obtaining an ESA to make a rollover from an APRA regulated super fund, they will need to contact the APRA fund directly.
At first it is perplexing as to why the most common rollover scenario, from an APRA regulated fund to an SMSF, would not be included in this temporary relief. However, referring back to the above comments made by the ATO in relation to SuperStream compliance, it is again noted that the obligation to undertake an electronic rollover in SuperStream is with the transferring fund. In this scenario that would be with the APRA regulated fund. Consequently, if the APRA regulated fund did implement a rollover of member benefits to an SMSF outside of SuperStream, they would be in breach of the relevant SIS provisions.
So, whilst it’s understandable why a rollover from an APRA regulated fund to an SMSF is not included in this temporary relief, it certainly would remain frustrating for those affected SMSFs.
What about audit and non-compliance consequences?
Where the SMSF contacts the ATO in relation to their difficulty in obtaining an ESA to facilitate a rollover and the ATO confirms to the SMSF that the rollover can occur outside of the SuperStream system, they will make a record of the approval and provide a reference number for the call. The SMSF can then advise their auditor of this approval and provide them with the reference number. The SMSF auditor will not be required to report a contravention to the ATO where the SMSF has received ATO approval to make the rollover outside SuperStream4.
Where an SMSF conducts a rollover outside SuperStream on or after 1 October 2021 without first seeking ATO approval is a reportable breach of the SuperStream rules. In lodging an Auditor/actuary contravention report, the SMSF’s auditor should tell the ATO the reason(s) why the rollover was conducted outside SuperStream, so they can take this into account when risk assessing the fund and deciding whether to apply penalties.
Where the ATO can see the SMSF has had issues obtaining an ESA, they have noted that they are unlikely to impose penalties for non-compliance with the SuperStream rules.
Six months down the track and………..
SMSFs are now just over six months into the compulsory requirement to conduct rollovers to and from the fund via SuperStream and the issue of obtaining an ESA to facilitate the rollover still exists. We continue to be contacted and made aware of issues that are causing delays and frustration when trying to rollover member benefits both to and from the SMSF. This is on top of the issues that existed pre compulsory use of SuperStream for rollovers and mostly continue today.
The goal and objective of extending SuperStream rollover requirements to SMSFs is admirable. Operating as it should and it appears to do so for many SMSFs, it does achieve the touted benefits of rollovers being “processed faster, more efficiently and with fewer errors”. However, for some SMSFS the jury may still be deliberating. With the benefit of hindsight, maybe ensuring that all SMSFs would be catered for with a SuperStream rollover solution before the compulsory start date would have been a good idea. Let’s hope that this issue is resolved well before the first anniversary of SuperStream rollovers for SMSFs being compulsory.