Changes to employer obligations – the introduction of Stapled Super Funds

From 1 November 2021, there are changes to employer obligations in relation to superannuation. With lockdowns ending, retail and hospitality opening up and Christmas approaching, it is vital that employers who have a large intake of staff over the upcoming period get their superannuation obligations correct. 

What do employers need to do when a new employee starts?

When a new employee starts in your business, and they do not provide a chosen super fund – you will need to request the employee’s ‘stapled super fund’ details from the ATO. 

The request needs to be made at either the point of the employee being eligible to choose a fund, or when you as the employer is required to make a superannuation guarantee payment. 

The steps to requesting the stapled super fund information from the ATO are:

1.     Offering the employee a choice of super fund – this can be a fund of their choice or the default fund offered by the employer

2.     Check ATO online services – this can be done by you or your authorised representatives with the appropriate permissions

3.     Submit a Tax File Number Declaration form or submit a Single Touch Payroll pay event for the employee

4.     Make the request via ATO online services by providing the employee’s details

Employers can make bulk requests of up to 100 new employees at one time. The ATO provides an Excel spreadsheet form to complete by providing each employee’s information. 

If the request is not made in time, the ‘choice shortfall penalty’ may be imposed. 

What it is a stapled super fund?

A ‘stapled super fund’ is an existing superannuation account that is linked or ‘stapled’ to the employee. The stapled super fund regime is intended to reduce the number of super funds individual may have – and as a result reduce the amount of super that gets lost or is eaten up by fees. 

What are employers’ superannuation obligations?

Currently, where you pay an employee $450 or more (before tax) in salary or wages in a month, you are required to pay superannuation guarantee for them. From 1 July 2021, the superannuation guarantee rate changes to 10% of the employee’s ordinary time earnings. 

Superannuation guarantee is payable to all employees and some contractors – it doesn’t matter if they work full-time, part-time, casual, are a family member, are a temporary resident, etc. 

The exceptions to the rule are:

• Employees aged under 18 – unless they work more than 30 hours a week and they are paid more than $450 (before tax) in a month
  
• Domestic or private workers – unless they work more than 30 hours a week and they are paid more than $450 (before tax) in a month
  
• Contractors – unless they paid mainly for their labour and are paid more than $450 (before tax) in a month
  
• Non-resident employees
  
• Employees who are covered by a bilateral super agreement
  

From 1 July 2022, the Government has announced it will remove the $450 per month threshold, which expands the obligations of employees. It will however streamline most payroll processes and make it easier for employers to ensure that they meet their obligations. 

What happens if you don’t meet your superannuation obligations?

In addition to the imposition of the ‘superannuation guarantee charge’, directors of companies who do not meet their superannuation obligations can be personally liable through the DPN regime. 

How can Tax Controversy Partners help you?

At Tax Controversy Partners, our experienced lawyers can represent your best interests in providing advice that is compliant with the current case law and legislation and based on our understanding of likely ATO actions. 

Please contact us using our online contact form, via email at admin@taxcontroverypartners.com.au or by phone at 02 8513 3813.