This blog post is part 1 of a 3 part series that will work as a guide for employers when it comes to their superannuation obligations for employees. Superannuation is a complex thing and a lot of employers don't realise the strict obligations and penalties for failure to comply.
Part 1 of the series will detail what to do when onboarding new employees, the requirement for a default superannuation fund and how to set this up.
Part 2 of the series will discuss obligations for paying superannuation, what deadlines apply and how to process the payments.
And finally, Part 3 will cover what needs to be done if superannuation is paid late and what the consequences of such are.
Part 1: Onboarding -
Default Superannuation Funds
All employers are required to nominate a default superannuation fund. This is the fund that, should your employee fail to nominate a fund of their choosing, the employer nominates to create a fund for them with.
Which fund you can use as your default fund will be stipulated by the award that you pay under. Some awards will restrict the choices to certain funds whereas others are more broad and will allow any fund.
To nominate a fund as your default fund, you'll need to follow these steps:
Go to their website and sign up as an employer
Follow the prompts to provide the required information
The fund will process your request and email you with an employer number - keep this in a safe place because it's important.
Update your super clearing house with your default super fund. This can either be done in the ATO Small Business Clearing House, or in your accounting program if you lodge super directly through the program. If you haven't nominated a clearing house and aren't sure what to use, your default fund may allow you to use their clearing house free of charge as well. See part 2 of this series for more information on superannuation clearing houses.
Onboarding Employees
When you onboard a new employee there are two documents that they're required to fill in. The first is a Tax File Number Declaration, and the second is a Superannuation Standard Choice Form. The Superannuation Standard Choice Form allows your employee to nominate a fund of their choice for you to make contributions into, or they can advise with this form that they would like the employer to set up a fund for them using their default superannuation fund.
Before providing this form to an employee, it's a requirement to fill in Section B, including part 7 that asks you to stipulate your nominated super fund. This advises your employee who your default superannuation fund is and who their default account will be created with if they opt for that.
What can be done if an employee does not fill in the Superannuation Standard Choice Form or the details on the form are not valid?
If your employee fails to nominate a superannuation fund or the details they fill in on the form are not valid, you're able to search for their stapled superannuation fund - as long as their start date was 1 November 2021 or later.
A stapled superannuation fund is an existing super account which is linked, or 'stapled', to an individual employee so that it follows them when they change jobs. This is aimed to prevent employees from having new accounts created for them any time they change jobs.
You can search for an employee's stapled superannuation fund in ATO's online services for business, or your Tax or BAS agent are able to do this on your behalf using ATO's online services for agents.
If your search for a stapled fund comes up with no result, you can then create a default fund for them. Instructions for setting up a default fund will be in Part 2 of this series.
Questions? Feel free to reach out to us at admin@herveybaytax.com or by phone on 07 4334 0002.