Businesses must be ready for SuperStream changes by the end of June 2014

The Tax Office is stepping up its awareness campaign about the looming changes in store for businesses that have superannuation guarantee (SG) obligations towards their employees.

Businesses with more than 20 staff have six months left to get ready for SuperStream, the Tax Office has warned. It sent out 100,000 letters over the last week of November telling businesses how to prepare, although it said there are more than 800,000 employers that will be required to take on the new system. Businesses with less than 19 staff have another year to get on board.

SuperStream (or "Superannuation Data & Payment Standard") is a new superannuation payments system being introduced to businesses which the Tax Office said should make things easier for employers. At the moment, an employer needs to meet their SG obligations by paying contributions at least quarterly to the nominated fund of their employee.

"Superannuation funds require this to be done in a few different ways," a Tax Office spokesman said. "Some demand a cheque, others a form filled out through the fund, some have some sort of electronic interface or web portal, or some use the banking system."

While the existing system may not have been too much of an onerous task were employees were limited to one fund, the fact that there are so many super funds to choose from has made meeting SG obligations a bigger task. "The average employer today … deals with 40 funds on average," the Tax Office said. "Where those funds are able to dictate the method payment, it can get very complicated."

SuperStream aims to fix this by introducing common data elements and processes for sending employer contributions. It legislates how funds will have to accept payments, with the aim of making the process more coherent for employers. "It sets up a standard format. It defines how that information needs to be organised, so whoever receives the data can interpret it in a structured way. And all payments have to be sent electronically," the Tax Office said.

The contribution data is sent electronically in message format to the fund, and the contribution payment is sent electronically through the banking system. The data message and payment are linked by a payment reference number that enables reconciliation at the receiving fund.

The Tax Office said the new system will make things easier for employers in the long run, but has also acknowledged that any change may cause disruption for businesses, which can pose a challenge. "We expect payroll software companies to offer upgrades to packages that will be SuperStream compliant. But any new system can take a while to settle down."

It said businesses that need to make changes to their payroll systems may find it helpful to start looking at it now. However the Tax Office also pointed out that businesses that use a superannuation clearing house (a third-party company that processes payments to multiple funds) can rest easy for now.

The Tax Office said that changes such as these take time, and careful planning and preparation will be needed to establish the new systems and processes. "Now is the time to prepare, by investigating your options for meeting the standard," it said. "Speak to your payroll software provider, clearing house, accountant or bookkeeper, or other service providers to help you find the right solution. Your default fund can also help."

SOURCE: Taxpayers Australia Inc. Wednesday, 4 December 2013 Article by Steve Burnham