From 1 November 2021, a Federal Government initiative called “super stapling” comes into effect. This is to address a common problem of employees often having multiple super accounts every time they change jobs. The benefit to employees is that they would have a “stapled” super account that follows them as they change jobs, leading to less duplication and fewer fees, and a higher overall super balance when they retire.
We are here to help you understand the new requirement, confirm who needs to comply, and outline how to action this. Our assistance will help you avoid being charged a “choice shortfall” penalty by the ATO if you don’t follow these new laws.
As an employer, here’s what you need to know and be prepared for:
- From 1 November 2021, super stapling will require an extra step in your new employee onboarding process.
- You will need to request stapled super fund details for new staff members. Use this Superannuation standard choice form from ATO. This includes contractors who you pay mainly for their labour and are employees for super guarantee purposes.
- If your new employee chooses a super account they already have, or chooses your default fund, you do not need to request stapled super fund details for them.
- Once an employee tells you their choice of super fund, you have 2 months to start paying contributions into that fund.
- If your employee has chosen a super fund, you can pay super contributions to their chosen fund. If your employee does not choose a super fund, in most circumstances you need to request a stapled super fund.
- You can’t provide recommendations or advice about super to your employees.
- The stapled super fund selection will be based on information the ATO hold about the employee’s super fund membership, as reported to them by funds.
Requesting the stapled super fund details from ATO
You’ll be able to request your employee’s stapled super fund details after you have submitted a Tax file number declaration or Single Touch Payroll (STP) pay event, which identifies that you have an employment relationship or link to your employee.
To request a stapled super fund, you, or your authorised representative, need to:
- Log into ATO online services.
- Navigate to the ‘Employee super account’ screen via the ‘Employees’ menu and select ‘Request’ to open the form.
- Enter your employee’s details, including their:
- TFN – an exemption code can be entered where an employee can’t 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.
- Read and click the declaration to sign it. You’ll also be able to tick a box under ‘more employees to request?’ to request stapled super fund details for additional employees.
- Submit your request.
Shortfall penalties (which are an additional super guarantee charge) are payable where employers make contributions to their default fund without making a stapled super fund request.
From 1 November 2021, to avoid the choice shortfall penalty, you need to make sure you request the stapled super fund details for any new employees as soon as possible if they have not provided you with their choice of fund. Do not pay into your super default fund and be sure to pay the contribution to the stapled super fund by the quarterly due date.
You can find out more directly from this link at the ATO website.
We look forward to helping you with these changes to how you pay your new employees superannuation – and helping you avoid being charged any penalties!
If you need further assistance from us, please contact our office and our accountants can assist you and we will send you a tax-deductible invoice for our services at our usual hourly rates.