The Australian Taxation Office has started implementing new regulations on businesses regarding new employee’s super accounts. Stapled super regulations are enforceable from 1 November 2021. A stapled super fund is an existing super account linked, or ‘stapled’, to an individual/employee so it follows them as they change jobs.
This initiative is aimed to protect individuals from the disadvantages of holding multiple accounts, namely, exposure to multiple management, administrative and investment fees. Furthermore, this allows individuals a better opportunity to manage and interact with their super funds as opposed to having a number of funds where repeating the same process might seem daunting and time consuming.
Businesses are now able to request an individual’s super fund information from the ATO to transfer the employee’s super guarantee, subject to proving that the same individual is an employee. Businesses are still required to fill a tax file number (‘TFN’) declaration and offer a choice of super funds to their new employees, where the employee can nominate his or her desired super fund.
However, in a situation where the employee does not provide their preferred super details, businesses may now request a stapled super fund form the ATO. Businesses are still allowed to set a default super account only if they are advised by the ATO that the employee does not have a stapled super funds and the employee has not made a choice on a super fund.
Requests for an employee’s stapled super fund are made via ATO online service, you must navigate to ‘Employee super account’ screen via ‘Employees’ drop-down menu. Once in the Employee super account screen, you will be able to start the request process. You may be asked to fill in the employee details including their TFN Declaration and/or address to confirm that an employee relation does exist. Once the request is submitted, it may take up to 28 business days before receiving a reply.
As mentioned earlier the ATO require a valid employer relationship, with this in mind a TFN declaration plays an important role in proving that relationship exists. In the absence of a TFN declaration, employers (i.e. businesses) must withhold 47% from any payment they make to a resident employee and 45% from a foreign resident employee.
Simaco Partners can assist your business, including likely conducting a request of a stapled super on your behalf. Please contact our office on 02 9707 4470 with any queries.
Stephen George Nikolovski
Simaco Partners Pty Ltd
Accountant and Tax Agent