The Australian Tax Office (ATO) has announced that it will offer new support to assist issues that many accountants are currently experiencing in regards to SuperStream rollovers.

The ATO has noted that it is aware that some SMSFs have had issues obtaining an ESA from an SMSF messaging provider to ensure a rollover occurs within the required time frame of three business days from receipt of all information required to process the request.

The ATO has noticed that this had caused major challenges for accounting professionals, with funds dealing with failed transactions and money getting lost in the system.

The ATO has said that it will address this via a dedicated phone support service for funds across the rollover process.

“If you have attempted to obtain an ESA to make a rollover from your SMSF, or receive a rollover from another SMSF, but you had issues doing so, you can contact us on 13 10 20 and select fast key codes 4 then 1 to discuss your options,” says the ATO.

The ATO would then check if funds had an SMSF messaging provider with rollover services.

“If you do we will ask you to contact the provider for further assistance. If you don’t you can request to undertake the rollover outside SuperStream. We will confirm over the phone that you can use the paper process used for rollovers prior to 1 October 2021 and make a record of the approval,” says a statement released by the ATO.

The ATO says that SMSFs should let their auditor know the fund had obtained the approval to make a rollover using the paper process and provide them with the reference number for the call.

“Your auditor will not be required to report a contravention to us where you have received our approval to make the rollover outside SuperStream. This is a temporary measure put in place to help facilitate SMSF rollovers,” outlined the ATO.

However, the ATO issued a warning noting that using a paper form to conduct a rollover outside SuperStream on or after 1 October 2021 without first seeking approval is a reportable breach of the SuperStream rules. 

“In lodging an Auditor/actuary contravention report, your auditor should tell us the reason(s) why the rollover was conducted outside SuperStream, so we can take this into account when risk assessing the fund and deciding whether to apply penalties. Where we can see the SMSF trustee has had issues obtaining an ESA we are unlikely to impose penalties for non-compliance with the SuperStream rules,” says the ATO. 

The ATO explaining that those with other issues regarding SuperStream compliance should use the same number and key codes to discuss the options.

The process is available only for rollovers from an SMSF and between SMSFs. If funds have issues obtaining an ESA to make a rollover from an APRA-regulated super fund to an SMSF, SMSFs will need to contact the APRA fund directly.

The Australian Government Is Being Encouraged To Put a $5 Million Cap on Super Balances

The Australian Government is being urged to put a $5 million limit on the balance of superannuation accounts which are in the name of an Australian worker.

The recommendations are being made by asset management firm Mercer, the firm also wants to force all Australians aged over 75 to draw down their super assets. They believe that having a cap on a superannuation balance should be justified for the sake of fairness, sustainability and equality.

Mercer believe that its recommendations will be beneficial in helping address inequality in Australia’s super system that it argued had an inherent bias towards high-income earners.

According to figures published by the Retirement Income Review outlined that the total number Australian workers who have a super balance that exceeds $5 million total stands at over 11,000 individuals. Mercer wants Australian workers to have their balance below the proposed $5 million cap by the time they reach the age of 70 or 75.

To prepare Australian workers for this change, Mercer believes that it would be appropriate for a three-year transition period to undertaking to make sure that the sale of assets that are not able to be sold quickly.

“We know that the biggest beneficiaries of the current super tax concessions are in fact those that need it the least – high-income earners. While there has been no shortage of commentary that lower-income earners need greater concessions, we must find a way for reforms to be financially sustainable and place no added financial strain on the federal budget,” says Mercer senior partner Dr David Knox.

Under the asset management group’s bold proposal, all Australian workers would also be forced to draw down their super assets at a minimum rate once they reach 75.

“Currently, there is no requirement for individuals to draw down their super assets during retirement, outside of what’s placed in a tax-exempt pension product, capped at $1.7 million. This means that most of the investment income from these assets is subject to just 15 per cent tax. That’s less than the lowest personal income tax rate,” says Dr. Knox.

The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 1300 1 VAULT (1300 182 858)

Post Author: Craig Dangar

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