Do you employ 20 or more employees or are you an employee of a business with 20 or more employees and have an SMSF, then read on.
From 1 July this year it will be compulsory for employers with 20 or more employees (large employers) to pay contributions to your SMSF electronically. It is estimated that there are about 150,000 SMSFs that are impacted. From 1 July 2015 it will be necessary for all employers (including small employers with 19 or less employees) to make contributions electronically. In both cases there is an exception to the rules where contributions are made to funds for 'related parties' of the employer. This is expected to remove around 25% of SMSFs from having to comply with the rules.
Under the new rules SMSFs will be required to receive contributions using an ecommerce standard so that contributions can be received by direct credit or BPay and the contribution data message is received electronically via a nominated electronic address.
There are three pieces of information that an employer must have by 31 May 2014 if contributions are to be made to the fund from 1 July. These are:
- The fund's Australian Business Number (ABN);
- Confirmation of the fund's bank account details; and
- An electronic service address.
Nearly all SMSFs have an ABN and a suitable bank account to receive the contributions. However, all SMSFs that wish to receive employer contributions under the new rules will be required to have access to an electronic service address which can be obtained via a range of service providers. A register of the service providers can be obtained from the ATO or your SMSF professional can help you to locate them.
If you are an SMSF administered by Goodwin Chivas & Co that is affected we will be contacting you in the coming weeks to discuss the options available to you.
If you are a large employer, that is an employer with 20 or more employees, your payroll systems will need to be updated to include the additional information by the required time to enable contributions to be made electronically. It is expected that your payroll software provider will provide solutions for you to manage your obligations with this regard. In discussions with our MYOB representative we understand that MYOB are planning to roll out a software upgrade next month to facilitate this. If you are unsure if your business will be ready we suggest contacting your payroll provider or your GCC team member to discuss.