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

Why have Australian living standards 'fallen' and how do we fix it?

For the last few years there has been much talk of a 'cost-of-living' crisis in Australia and of 'falling living standards'. Lately this has flared up again with the pickup in inflation resulting in a renewed fall in real wages.

Will you run out of money in retirement?

Fear of running out has become a defining retirement anxiety. Why do some retirees die with substantial wealth while others deplete their nest egg? Evidence suggests the answer is more complicated than we think. 

Four options for an income investor’s next dollar

What if Australia’s golden age of dividends is ending? Rather than overhaul your portfolio, it may be worth considering where new capital can work harder. I discuss four income strategies and the trade-offs behind each.

Why spending more in early retirement can improve lifetime income

Conventional wisdom encourages retirees to preserve superannuation. But if those likely to qualify for the Age Pension later in life spend a little more today, it may deliver higher lifetime income and a more stable retirement.

The investment that sidesteps the new tax traps

Tax rules have changed, but many investors are still using yesterday’s strategies. Insurance bonds may offer advantages for those seeking greater control, tax efficiency and certainty about their wealth.

Testamentary trusts have secured the CGT exemption

Treasury’s latest CGT reform draft delivers a win for testamentary trusts and deceased estates, exempting estate-derived gains from the 30% floor. However, questions on death and divorce rollovers remain unresolved.

Latest Updates

Retirement

Why spending more in early retirement can improve lifetime income

Conventional wisdom encourages retirees to preserve superannuation. But if those likely to qualify for the Age Pension later in life spend a little more today, it may deliver higher lifetime income and a more stable retirement.

SMSF strategies

Who really loses from the SMSF borrowing ban?

The ban on borrowing to buy residential property inside a self-managed super fund was framed as closing a loophole for the wealthy. Yet ATO data suggests its effects may be felt more heavily on members with moderate balances.

Investment strategies

The investing rule that explains the next market crash

What if investment success depends less on picking the right assets and more on understanding the decisions of other investors? A principle borrowed from game theory offers a different perspective on markets.

Investment strategies

Gold: should you own the metal or the miners?

Gold is back in the headlines but investors may be asking the wrong question. Before deciding where prices are headed next, it's worth considering whether the investment you choose will deliver the outcome you're actually seeking.

Fixed interest

Global bonds markets are hiccupping

For decades, investors looked the other way as government debt ballooned. But a reckoning may be beginning. Bond markets are stirring and the consequences could reach far beyond markets into everyday life.

Property

Why investors are looking beyond traditional property sectors

A little-known corner of the property market may be quietly benefiting from powerful demographic and healthcare trends. Could this specialised sector offer investors something increasingly difficult to find: enduring demand?

Retirement

Retirement in reality - 6 months in

Is retirement really an identity crisis, or is something else at play? New insights challenge conventional thinking and reveal why some retirees struggle to fully embrace life after work.

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.