Medium and large businesses should start preparing for changes to their super obligations now to ensure they are ready for the changes on time, according to the Australian Taxation Office.
Employers with 20 or more employees must use the data and e-commerce standard (the Standard) by 1 July, 2014 as part of the Government’s SuperStream measures to ensure all data and money are transferred electronically.
Alison Lendon, deputy commissioner, superannuation, said businesses shouldn’t wait until next year to make any required changes.
“If you think your business will need to update software or systems, you should start planning now to ensure you’re ready on time,” Lendon said.
“If you prefer to process your super contributions for staff yourself, you can work with your default super fund or payroll supplier to meet the new data and e-commerce standard. Other partners, including accountants and clearing houses, will be able to help as well.”
Once implemented, the Standard will provide a consistent and reliable method for processing superannuation payments electronically and result in:
fewer data quality issues
a simpler, more consistent contribution process
fewer lost accounts and unclaimed monies
faster processing of employees' money into their super accounts
lower overall processing costs.
“The Standard is about moving super into the 21st century and removing much of the administrative burden and the inefficiencies faced by employers,” Lendon said.
“The goal is to improve the efficiency of the superannuation system, to improve the timeliness of processing of contributions and reduce the number of lost accounts and unclaimed monies.”
The ATO is encouraging employers and funds to work together to become data standard ready.
The following reforms will impact businesses from 1 July 2013:
Employers must increase the compulsory super payments they make on behalf of their eligible employees from 9% to 9.25%. The rate will be gradually increased to 12% by July 2019.
The existing age limit for employee super guarantee eligibility will be removed. This means employers must start making super guarantee (SG) payments for eligible employees aged 70 years and over.
Lendon said changes to the SG coming into effect on 1 July this year will be relatively seamless for businesses.
“The administrative changes you need to make are relatively straightforward,” Lendon said. “Employers will need to ensure their payroll and accounting systems are able to cater for the gradual increase in the super guarantee rate and removal of the upper age limit."
Lendon added that software and payroll providers already have scheduled system changes to ensure employers will be ready for the 1 July 2013 SG changes.
MySuper is a new, simple and cost-effective superannuation product that will replace existing default super fund products.
Lendon said employers must make super guarantee payments for employees who have not selected a preferred fund, to a fund that offers a MySuper product, by 1 January 2014.
“For most employers, it is expected that their existing default fund will offer a MySuper product,” Lendon said.
“These employers will not have to make any change to the payment of superannuation guarantee contributions. Your fund should contact you to advise that they will offer MySuper product and any changes to the entitlements of your employees.
Lendon added that for further information on the MySuper product offered by the employer default fund, the fund should be contacted directly
Funds are allowed to start offering MySuper products from 1 July 2013.