Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 62

Changes to SMSF contribution methods

SMSF trustees must prepare for new ways to receive superannuation contributions for their members as they can no longer accept cheques from 1 July 2014. A new superannuation law requires certain employers to make superannuation contributions for their employees into SMSFs electronically.

Employers affected by this change are those who have 20 or more employees. The law does not apply to SMSFs that have related parties as employers. A related party includes the members of the SMSF as well as relatives of members, business partners and any associated companies and trusts. Employers with less than 20 employees will need to comply with the new law from 1 July 2015.

The purpose of this law is to increase the efficiency of the Australian superannuation system. It is aimed at improving the quality of superannuation records, allowing the use of tax file numbers to identify members, improving rollover transactions between superannuation funds and standardising the process for making contributions.

Affected employers will be required to make superannuation contributions for their employees by submitting payments using the new Data and Payment Standards and having the payments recorded electronically using a prescribed format. Employer contributions made by cheques or other paper formats are no longer acceptable.

In my opinion, our superannuation system will benefit from this new law as there are currently over 180 different payroll systems used by different superannuation funds. Their processes are complex, time consuming, expensive and prone to error. The new requirement will provide a minimum standardised format for all superannuation funds and will reduce manual processing, improve data quality, reduce errors, lower costs, require less preparation time and provide faster receipt of contributions. It will mean better information about the amounts and timing of payments made for employees and will improve data matching which will reduce both lost superannuation accounts and the chance of members being given multiple accounts and thus having to pay multiple administration fees and insurance premiums.

SMSFs that receive superannuation contributions from unrelated employers will need to contact their employers and provide them with:

  • an electronic service address (not an email address) for the delivery of contribution data messages
  • the SMSF’s Australian Business Number
  • the SMSF’s bank account details

There’s not much time. SMSFs will need to provide the above information to their unrelated employers by 31 May 2014 in order to meet the deadline of 1 July 2014. They will also need to ensure that the SMSF’s bank account is able to receive electronic contributions and contribution messages with information about the payments in the new electronic format. To help SMSF trustees obtain an electronic service address, the ATO has published a register of messaging solution providers on its website.

I recently accessed the ATO website to check on the providers. Australia Post is one of the providers that can assist SMSFs with receiving readable messages from employers and other superannuation funds. They are currently providing a special welcome offer of $25 for a 12 month registration. The offer ends on 31 May 2014.

SMSFs that fail to comply with the new electronic standard will not be able to receive superannuation contributions from unrelated employers and rollovers from retail superannuation funds. An administrative penalty of up to $3,400 may be imposed by the ATO for non-compliance. The ATO can also issue a direction to an SMSF trustee to address the contravention and take action.

Unrelated employers that don’t receive the information from SMSFs before 1 July will be required to remit their employee’s superannuation contributions to their company’s default superannuation fund instead of the employee’s SMSF. This will mean delays for members receiving their superannuation contributions. I encourage trustees to look into the Data and Payment Standards without delay.

Footnote from Monica: The Australian Taxation Office has since informed me that although SMSFs that fail to comply with the new electronic standard will not be able to receive superannuation contributions from unrelated employers, they will still be able to accept rollovers from retail superannuation funds.

 

Monica Rule worked for the Australian Taxation Office for 28 years and is the author of ‘The Self Managed Super Handbook – Superannuation Law for Self Managed Superannuation Funds in plain English’ www.monicarule.com.au

 

  •   16 May 2014
  • 3
  •      
  •   

RELATED ARTICLES

SMSFs: 8 reasons they are over-spruiked and over-rated

Meg on SMSFs: Where are the risks in our major super sectors?

Are you paying tax by not starting a super pension?

banner

Most viewed in recent weeks

It’s time for LICs to die

A high-profile dividend cut and a prominent fund manager’s apology have reignited a long-running debate. If investors can access similar exposures more cheaply and efficiently elsewhere, what exactly is keeping LICs alive?

Division 296: the initial moves to make before the windows close

What if the best superannuation strategy isn't about earning more, but acting before your options disappear? Several overlooked planning windows are narrowing, with consequences that can last for decades.

The retirement scorecard: how many of these questions can you answer?

From the maths of retirement, estimating spending and picking the right asset allocation to survive a poor decade, here are the questions every retiree – current or future – should be able to answer for themselves.

Testamentary trusts: Treasury has picked the wrong reading

A decades-old estate planning tool has survived one tax crackdown only to be caught by another. The surprise isn't who the reform is targeting, but who could end up paying the price for drafting choices made years ago.

Higher yields are creating opportunities in global bonds

Bond markets are adjusting to a new reality, but not in the ways investors expect. With markets repricing and capital competing for attention, investors may need to rethink where resilience and opportunity lie. 

Will investors be better or worse off under new housing tax changes?

Housing tax reforms have sparked warnings of market turmoil and promises of greater fairness. But after modelling nearly two decades of property data, the results suggest winners and losers may not be who many investors expect.

Latest Updates

Superannuation

Superannuation’s structural failings

Politicians are fighting over access to super, but they may be arguing about the wrong thing. The system’s three fundamental flaws have been hiding in plain sight for decades, costing Australians far more than they realise.

Planning

The great wealth transfer myth

Why do some families preserve wealth for generations while others struggle to? As the great wealth transfer unfolds, the determining factor is often not the structure of the estate, but the preparation of those who will inherit it.

Investment strategies

What comes after bank hybrids?

For years, bank hybrids have been a cornerstone of portfolio income. With tens of billions of dollars now disappearing from the market, investors face a critical question: what comes next, and are the obvious replacements enough?

Investment insights from the US

What happens when knowledge becomes a commodity? The latest themes emerging from the US tech sector suggest AI could reshape company moats, disrupt incumbents and create winners and losers in unexpected places.

Investing

Can Berkshire thrive without Buffett?

Warren Buffett's departure marks the end of an era. But the more important question for investors is whether Berkshire's culture, discipline and capital allocation framework can survive without the man who built them.

Retirement

The Bengen 4% Rule: Lost in translation

For years, retirees have been told to focus on withdrawal rates. But the real question is far simpler: how many dollars can you safely spend? The answer may be very different from what conventional retirement wisdom suggests.

Interest rates

Super low interest rates came with side effects

For more than a decade, investors lived through an era of near-zero interest rates. With bond yields now surging, it's worth asking whether cheap money solved economic problems, or introduced a much larger set of risks.

Sponsors

Alliances

  • ASA-Logo-RGB-ActiveGreen-web.png

© 2026 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.