Payday super
We are engaging external stakeholders in co-design around policy parameters of the measure and have formed the Payday Super Working Group. The group will provide advice on the end-to-end administrative solution for Payday super.
Key messages from the working group will be published on ato.gov.au in line with the ATO Consultation framework. In determining membership for the group, consideration was given to stakeholders with a broad range of expertise and experience across different sectors. For those unsuccessful in their application, there will be further opportunities to participate in other technical discussions and workshops as the program moves forward.
Stakeholders will be kept updated through our various stewardship groups and stakeholder relationship groups, like the Superannuation Administration Group.
Members are encouraged to monitor the ATO’s website, newsroom articles, and review the fact sheet published on the Treasury website for the most up to date information.
Payday super: SuperStream improvements
Following the government’s announcement and fact sheet released in September 2024, the ATO held a workshop with various stakeholders on 9 and 10 October 2024. Irritants and ideas for improvement that were identified in the June workshop was discussed and we prioritised enhancements to SuperStream for further investigation.
Key focus areas identified within SuperStream included:
- getting the data right
- ensuring error messages are meaningful, timely and useful
- timely return of unallocated payments
- enabling payments through the New Payments Platform
- ensuring SuperStream messaging supports ATO matching processes for superannuation guarantee compliance
- enhancing the Fund Validation Services.
These are dependent on developing a detailed understanding of current issues with SuperStream and error messages as well as transaction volumes to support identifying design improvement and enhancement ideas. We are reaching out to industry representatives to further input.
Group discussion included:
- Feedback or communication and reversion of Guidance notes, which are mandatory and not only a ‘guide’ for funds. Their use aims for consistency of process.
- Can data solutions be used before the committing of expenditure by funds?
- Scenario pack/examples regarding employer contributions are being created.
- Focus area will be error messaging – understanding the issues and solutions available for all stakeholders.
- Clearing houses – what are the main causes of data issues and how we address rectification.
- Insights will allow participants to understand the process and help harmonise errors.
- Successor Fund Transfers (SFT) – currently have a significant impact on error volumes
- intel provided to the ATO indicate that 20% of errors received by one clearing house were attributed to one SFT this year
- the ATO has issued a revised SFT protocol and we encourage funds to work closely with us during any SFT process.
- The role of the Superannuation Data Standards Technical Group was clarified. It is a valuable and practical forum that will support detailed SuperStream matters connected to Payday super.
Members were advised to email paydaysuper@ato.gov.au to share any specific feedback they have.
Environmental scan
SFT protocol
A request for the ATO to provide a comparison document to assist funds with easily identifying the changes in the protocol was made. The SFT protocol template format has changed recently, and we agreed to develop and share a document to highlight the key changes made to the protocol.
Member account attribute service reporting
Work between funds and the ATO to ensure transferring fund has successfully closed all accounts reported under the closing Australian business number was discussed. The ATO produces an internal report to ensure there are no open accounts post an SFT. When we identify that the process it is not complete, we contact the relevant funds. Some funds and administrators do reach out prior to an SFT to request assistance with data and reporting.
We encourage early engagement with us when undertaking an SFT.
Engagement
Members queried whether there is an opportunity to obtain intel from Australian Prudential Regulation Authority (APRA) as to upcoming SFTs that would allow the ATO to ensure the appropriate engagement of participating funds is undertaken.
We have previously met with APRA to discuss this situation. It is currently a manual process, and this intel could be provided monthly, but not as they are received. We scan external media for intel on up-and-coming SFT’s and contact funds as necessary. We also obtain a list of SFT’s that the gateways manage through the GOM and compare with what we have on our register.
We recognise the importance of continual improvement in the SFT process including engaging with APRA.
Departing Australia superannuation payment
Members queried if the current process could be reviewed for the departing Australia superannuation payment. Currently the length of time it takes to finalise a transaction is generating complaints from members to fund trustees, and it’s not the fault of the funds.
Is there an opportunity to contemporise without law change, or does industry need to advocate for law change?
The ATO is considering the issue and will share further information with this group when appropriate.
Better targeted super concessions
On 9 October 2024 the bills were passed in the House of Representatives and were introduced and read for the first time in the Senate on 10 October. The second reading and corresponding debate has been adjourned until mid-November.
We are still awaiting the outcome regarding consultation of the legislative regulations. A special purpose working group was formed to co-design the administrative solution for this measure. So far decisions made include:
- Changes to the 2025 Self-managed superannuation return (SMSF) annual return (SAR) are being made to adjust the wording of labels to accommodate the repealing of the term accumulation phase value from the income tax assessment act.
- Label X1 will be changed from accumulation phase value to 'value of accumulation account'.
- Label X2 will also be changed from retirement phase value to 'value of retirement account' for consistency in wording of these two labels.
- We will update the SAR instructions.
- For funds that are not a SMSF we will update instructions for the member account transaction service (MATS) business implementation guide (BIG) and the fund reporting protocol.
Division 296
To calculate the Division 296 tax super earnings, the ATO will require funds to report information that is not currently reported. We are finalising what information needs to be reported and will share the results with this forum.
For SMSFs, the additional information will be obtained from the SMSF annual return. For non SMSFs, the request for information process (RFI) will be via Online services for business.
Request for information
As we require a fund’s annual member closing balance reporting to calculate an individual’s total super balance (TSB) to determine if they exceed the $3 million threshold, we expect to issue the RFI post 31 October.
If an individual is a member of an SMSF and their interest in their SMSF is needed to identify if their TSB will exceed $3 million, the RFI may not issue until the SMSF lodges their annual return.
The due date for an SMSF to lodge their annual return is between 31 October and 5 June.
Fund’s will have 10 business days to respond to the Division 296 RFI and we will develop a transitional arrangement for the first year of operation to ensure funds get the support needed.
The Division 296 RFI will be an approved form and funds will be required to amend Division 296 tax information reported within 30 days of becoming aware of changes required.
SFT and Internal fund transfer
When we are advised by a fund that they are closing due to a SFT, we will request the closing fund provide the Division 296 tax additional information for members that have a TSB over a specified threshold. The closing funds will provide this information via the Division 296 RFI process in Online services for business. The SFT protocol instructions will be updated.
We will work with funds that are involved in an intra-fund transfer on a case-by-case basis to obtain the required Division 296 tax additional information.
There is still a significant amount of design work required for this measure, our next priority topics include:
- How Division 296 release authorities are going to work. We acknowledge that a change to SuperStream is a significant impact to industry and are currently looking at whether we can repurpose the Division 293 product code for Division 296.
- We are close to finalising the information funds are required to report to us, and we will share the results with this group once finalised.
- Finalising the changes required to the 2025–26 SAR to accommodate the collection of Division 296 information.
- Designing the Division 296 notice of assessment, election and ATO online screens.
- We are working on the Division 296 tax web content and changes to the existing TSB content so they will be ready shortly after the measure receives Royal Assent.
In summary there is still a substantial amount of work to do in the co-design process, and the ATO greatly appreciates the support of industry as we move forward.
CDBIS – TBC technical changes for a SFT
The following progress update for Capped defined benefit income stream (CDBIS), transfer balances cap (TBC) technical changes for a successor fund transfer (SFT) included:
- we have identified and contacted all impacted funds and continue to work through actions and options for remediation, and assisted those that are able to remediate by re-reporting
- updates to the SFT/IFT protocol document have been published, and updates to the MATS BIG are underway.
We are seeking self-nomination from funds to get in contact with us if:
- your fund has been a party to an SFT
- your CDBIS members were negatively impacted
- you have not yet been contacted by the ATO to discuss remediation.
Changes due to regulatory amendments were discussed including:
- credit in the successor fund will equal to the debit in the transferring fund
- no net impact to CDBIS members TBA resulting from SFT
- regulations in effect from 6 July 2024 with retrospective application to 1 July 2017
- remediate members previously disadvantaged (any advantage is preserved)
The scope of applicable remediation was discussed including:
- updating the credit transaction in the successor fund (equal to debit transaction in transferring fund)
- recalculation of the highest ever TBA balance
- recalculating the TBC indexation
- recess transfer balance determinations revoked, and refunds generated (where excess transfer balance liability assessments were paid)
- fund re-reporting or internal ATO remediation.
The ATO was thanked for their efforts in the remediation process and acknowledged industry stakeholders have been working collaboratively toward successful outcomes.
Superannuation on paid parental leave
The amendments to the Paid Parental Leave Act 2010 to enact the measure are now law. The first payments of the Paid Parental Leave Super Contribution (PPLSC) will be made from July 2026.
The ATO is awaiting further PPL rules to be made to clarify some parameters for the measure, including the fund hierarchy for payments and interest calculations.
PPLSC system and reporting design considerations:
- PPLSC payments will be treated as concessional contributions and taxed in the fund.
- Payments will be made annually from July 2026, with no identified Payday super impacts.
- The PPLSC payment will be based on the SG rate for each financial year, plus an interest component.
- PPLSC payments will be sent to funds by the ATO, even where the base parental leave pay amounts are paid by employers on behalf of Services Australia.
Member discussion
- Funds agreed that it is beneficial that there is not a wholesale change to current processes.
- Once the PPL rules are finalised, industry would like to be advised as soon as possible.
- Industry feedback is that members may think funds are holding onto their PPLSC payments due to the annual nature of the payments and that it may take 12 months to credit their account. As such, the ATO communication messaging must clearly articulate the process and timeframes.
- The ATO will provide members with details of draft communications where possible.
- The project team is working with Services Australia regarding the communications strategy to ensure consistency of messaging and to manage client expectations.
Super enquiry service insights
The Super Enquiry Service (SES) received 811 enquiries between 1 August 2024 to 25 October 2024 with the top 5 issues including:
- Division 293
- SVS/SMSF verification
- Reconciliations/Suspended Payments/Data Messages/SOA
- MATS
- Unclaimed superannuation.
Suspended payments and failed validations
Suspended payments and failed validations (PVA) continues to be time consuming work, especially when the data message and payment are not sent in accordance with the data and payment standards.
There has been a decrease in suspended payments over the last couple of months, mostly due to system fixes implemented by several funds we have been working with.
Reconciliations
There has been an increase in reconciliations between 1 August 2024 and 25 October 2024, however it is noted that funds are proactively undertaking reconciliations that formed part of messaging in the past.
Funds are encouraged to continue contacting the ATO for any issues or questions regarding PVA and payments.
Super enquiry service
We have commenced creating ATO initiated requests using the new team account function.
Requests will appear in a funds’ team mailbox, which is encouraged to be checked often. Early feedback is positive and we thank all funds and administrators who have created the team account and are responding to requests promptly.
The super enquiry service web page will be updated soon to include ATO initiated requests.
Member discussion
Members queried about funds receiving both email and SES initiate requests for the same type of enquiry and the ATO advised this issue will be taken offline and further examined.
We confirmed the super enquiry service will gradually be rolled out across other super products.