Super choice rules to change from 1 November

When your business hires a new employee, the Choice of Fund form is used to identify where they want their superannuation to be directed. If the employee does not identify a fund, generally the employer directs their superannuation into a default fund.

From 1 November 2021, where an employee does not identify a fund, the employer is required to contact the ATO and request details of the employee’s existing superannuation fund or ‘stapled’ fund (the fund stapled to them). A stapled super fund is an existing super account which is linked, or ‘stapled’, to an individual employee so that it follows them as they change jobs. The change aims to reduce account fees by stopping new super accounts from being opened every time an employee starts a new job.

The request is made through the ATO’s online services through the ‘Employee Commencement Form’.

If the ATO confirms no other fund exists for the employee, contributions can be directed to the employer’s default fund or a fund specified under a workplace determination or an enterprise agreement (if the determination was made before 1 January 2021).

If you don’t meet your choice of super fund obligations, additional penalties may apply.

Get ready

To make sure you’re ready to request stapled super fund details, check and update the access levels of your authorised representatives in ATO online services.

If an authorised representative doesn’t:

have full access in ATO online services, they will need to have the ‘Employee Commencement Form’ permission in order to request a stapled super fund
need to access this service, you should remove this permission for them to protect your employees’ personal information.

What you need to do from 1 November 2021

You may need to request stapled super fund details when:

your new employee starts on or after 1 November 2021
you need to make super guarantee payments for that employee, and
your employee is eligible to choose a super fund but doesn’t.

You don’t need to offer a choice of super fund to some employees, but you may still need to request their stapled super fund details. This includes employees that are either:

temporary residents
covered by an enterprise agreement or workplace determination made before 1 January 2021.

Step 1: Offer your eligible employees a choice of super fund.

You need to offer your eligible employees a choice of super fund and pay their super into the account they tell you. Most employees are eligible to choose what fund their super goes into. They can choose a super account they already have or choose your default fund.

If you pay contractors mainly for their labour, they are employees for superannuation guarantee purposes and you may need to pay super to a fund for them. If you need to pay super and they do not make a choice, you will have to request a stapled super fund.

There is no change to this step of your super obligations. If your employee has chosen a super fund, you can pay super contributions to the chosen fund.

You cannot provide recommendations or advice about super to your employees, unless you are licensed by the Australian Securities & Investments Commission (ASIC) to provide financial advice.

Step 2: Request stapled super fund details

If your employee doesn’t choose a super fund, you may need to log into ATO online services to request their stapled super fund details. A tax practitioner can also do this for you.

You’ll be able to request your employee’s stapled super fund after you have submitted a Tax file number declaration or Single Touch Payroll pay event linking you to them. There is no limit to the number of requests you can make.

To request a stapled super fund, you, or your authorised representative, need to:

log into ATO online services.
enter your employee’s details, including their:
- TFN – an exemption code can be entered where an employee cannot provide their TFN, but this could result in processing delays
- full name – including ‘other given name’ if known
- date of birth
- address (residential or postal), if TFN not given.
The ATO’s online system will use rules based on the regulations to work out and return a stapled super fund in response to a request.

You will receive the response on-screen. You should be notified of the result of the stapled super fund request within minutes.

The ATO will notify your employee of the stapled super fund request and the fund details they have provided.

If the request was made on your behalf by an authorised representative, the ATO will notify you of the outcome of that request.

If the stapled super fund won’t accept contributions

If the stapled super fund account provided by the ATO cannot accept contributions for the employee, you should make another request for the employee’s stapled super fund via ATO online services.

If the same stapled super fund account is returned, call the ATO on 13 10 20 to obtain an alternative stapled super fund account. If there is no alternative fund, the ATO can advise whether contributions can be made to your default fund or another fund that meets the choice of fund rules.

Types of stapled super funds

Any eligible fund, including a defined benefit fund, can be provided as a stapled super fund. However, some defined benefit accounts may not be able to accept contributions from all employers.

If a stapled super fund request returns a self-managed super fund, you should obtain the electronic services address and bank account details from your employee. If the employee will not supply these details, call the ATO.

Step 3: Pay super into the stapled super fund

If the ATO provide a stapled super fund result for your employee, you must pay your employee’s super guarantee contributions to the stapled super fund details provided.

You can pay into your default fund, or another fund that meets the choice of fund rules if:

your employee doesn’t choose a super fund, and
the ATO have advised you that they don’t have a stapled super fund.

Need further help?

Our specialist Superannuation accountants have extensive experience in the tax and compliance issues specific to super and self-managed super funds. With our expert guidance, you’ll have peace of mind that you are ticking all the right boxes and avoiding any risk of non-compliance.

You can find out more about working with Marsh & Partners here. As your Absolute.Account.Ability partner we’re on a mission to make your business life better. We’ll help you set goals for your business, devise an Action Plan to make them happen and meet with you regularly to ensure you stay on track.

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