Super Choice rules will change from 1 November 2021

From 1 November 2021, new rules will apply in relation to 'super choices' for new employees joining your business after this date. As an employer you will need to undertake an additional step during the induction process for new employees, to comply with the choice of superannuation fund rules. Penalties can apply if the choice requirements are not satisfied.

What are the changes?

Under current rules, when bringing new employees into your business, you can add them to their default superannuation fund if the employee has not chosen a superannuation fund. However, going forward for any new employees starting from 1 November 2021, employers will be required to contact the Australian Taxation Office ( ATO ) if the employee has not chosen a superannuation fund to confirm check whether the employee has a "stapled fund".

A 'stapled fund' is an existing superannuation account which is linked, or in other words "stapled", to an individual employee so that it follows them as they change jobs. If the employee has a stapled fund, the employer will need to make contributions to that fund, and not to the employer's default superannuation fund.

These provisions were introduced to reduce instances of employees having multiple superannuation fund accounts and help to reduce the compliance fees associated with setting up new fund accounts each time an employee moves between jobs.

How can Employers get ready for these changes?

To make sure you are ready to request stapled super fund details from new employees, you should check and update the access levels of your authorised representatives in the ATO's online services ( click here ).

You must meet your choice of super fund requirements and any stapled fund obligations by the quarterly due date (which will be 28 January 2022 for the quarter ending 31 December 2021), otherwise penalties may be imposed. We recommend these steps be taken as soon as possible to avoid any potential exposure to penalties.

What steps are involved?

From 1 November 2021, employers should consider the following three steps summarised below.

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

You need to give any eligible new employees a Super Standard Choice Form ( click here ) and pay their super into the account they provide the details for on that form. Most employees are eligible to choose what fund their superannuation contributions go into.

There is no change to this step, in relation to the employer's obligation to make superannuation contributions on time.

Step 2: Request stapled super fund details

If your employee does not choose a super fund, you may need to log into the ATO's online services ( click here ) and go to Employee Super Accounts to request their stapled super fund details. If you require any assistance, please ask your Lowe Lippmann Relationship Partner to assist you.

You will be able to request your employee's stapled super fund after you have submitted a Tax File Number (TFN) declaration ( click here ) or Single Touch Payroll pay event linking your business to them. There is no limit to the number of requests that can be made, and bulk requests can be made when dealing with multiple new employees joining your business.

To request details of an employee's stapled super fund, the employer (or their authorised representative) will need to log into the ATO's online services ( click here ) and enter the employee's details, including:

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; and
address (residential or postal), if TFN not given.

You will receive the response of the search on-screen, and the ATO will notify your employee of the stapled super fund request and confirm the fund details provided to you via the search.

Step 3: Pay super into a default fund

Once a stapled super fund search result has been provided for your employee, then you must pay your employee's superannuation contributions to the stapled super fund details provided.

You can pay super contributions into a default fund, or another fund that meets the choice of fund obligations, if:

your employee does not choose a super fund; and
the ATO search results do not find a stapled super fund via the search process explained above.

You do not need to offer a choice of super fund to certain new employees, but you may still need to request their stapled super fund details, which includes employees that are either:

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

For full details of these steps, you can consider the ATO website here.

Please do not hesitate to contact your Lowe Lippmann Relationship Partner if you wish to discuss any of these matters further.

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