Businesses with more than 20 staff have six months left to get ready for SuperStream, the Australian Taxation Office has warned.
The ATO is trying to spread awareness about the change, having sent out 100,000 letters this week telling businesses how to prepare.
SuperStream is a new superannuation payments standard being imposed on the industry to make things easier for employers, the ATO’s Philip Hind tells SmartCompany.
“At the moment, an employer needs to meet their superannuation guarantee obligations by paying contributions at least quarterly to the nominated fund of their employees,” he says.
“Superannuation funds require this to be done in a few different ways – some demand a cheque, others a form filled out through the fund, some have some sort of electronic interface or web portal, or some use the banking system.
“Some funds insist on cheques, believe it or not.
“This wouldn’t be such a drama for employers if their employees had only one fund.
“But the average employer today… deals with 40 funds on average. Where those funds are able to dictate the method payment, it can get very complicated.”
SuperStream aims to fix this.
It legislates how funds will have to accept payments, with the aim of making the process more coherent for employers. “It sets up a standard format. It defines how that information needs to be organised, so whoever receives the data can interpret it in a structured way. And all payments have to be sent electronically.”
From July 1 2014, all employers with 20 or more employees will have to send funds electronically to superannuation funds, in a set data standard. Smaller employers have an extra year to prepare for the new standard.
“Will employers still have to send multiple payments? Yes, they will. But as far as data goes, most employers will find they only have to send all their payments to one channel, than the man receiving fund will send the other payments on,” Hind says. “It simplifies things.”
The ATO believes the new system will make things easier for employers in the long run. But Hind acknowledges that any change causes disruption for businesses, which can pose a challenge.
“We expect payroll software companies to offer upgrades to packages that will be SuperStream compliant. But any new system can take a while to settle down.
“We expect employers will find the new process works very efficiently. But there’s always difficulty with change.”
Businesses that need to make changes to their payroll systems should start working on it now, Hind says. However, businesses that use a superannuation clearing house (a third-party company that processes payments to multiple funds) can rest easy for now.
“Most employers really only need to talk to their payroll supplier, or a service partner who helps with their payroll and contributions if they have one. Their supplier should be aware of the technical details – they can then provide further guidance.”
More information about SuperStream is available on the ATO website.
This article first appeared in Smart Company.