From 1 July this year it will be compulsory for employers with 20 or more employees (large employers) to pay contributions to your SMSF electronically. It is estimated that there are about 150,000 SMSFs that are impacted. From 1 July 2015 it will be necessary for all employers (including small employers with 19 or less employees) to make contributions electronically. In both cases there is an exception to the rules where contributions are made to funds for ‘related parties’ of the employer.
Under the new rules SMSFs will be required to receive contributions electronically via a nominated electronic address. There are three pieces of information that an employer must have by 31 May 2014 if contributions are to be made to the fund from 1 July. These are:
- The fund’s Australian Business Number (ABN);
- Confirmation of the fund’s bank account details; and
- An electronic service address.
Nearly all SMSFs have an ABN and a suitable bank account to receive the contributions. However, all SMSFs that wish to receive employer contributions under the new rules will be required to have access to an electronic service address which can be obtained via a range of service providers. A register of the service providers can be obtained from the ATO or your SMSF professional can help you to locate them. If you are currently using an administration service for your SMSF the administrator will understand what is required to access the electronic service address and may have already let you known what is happening.
If you are a large employer, that is an employer with 20 or more employees, it is expected that payroll systems will need to be updated to include the additional information by the required time to enable contributions to be made to the SMSF. The ATO is currently updating the Election of Superannuation Fund choice form so that contributions can be made by employers to the nominated SMSF.
Clients of Simplex would have recently received a letter explaining how these new rules will operate. However, if you have any specific questions, please do not hesitate to contact the Simplex team.