As of 1 November 2021, employers will need to comply with the change to the stapled superfund rule for new hires.
Traditionally when a new employee joins a company, the employer must provide the employee with a choice of super fund as part of their employer superannuation obligation. The employee will have to complete the superannuation choice form in order to provide the employer with details of the fund chosen by the employee.
What’s changed?
From 1 November 2021, if the employee did not exercise their choice to provide the employer with details of their superfund, the employer must submit a request to the ATO to check whether their new employee has a “stapled” super fund.
How do you do this?
The request can be submitted using the ATO online services.
What is a stapled superfund?
A stapled superfund is a single default superannuation account that is “stapled” to an individual.
Where an employee has multiple existing eligible super accounts, the ATO will apply the 'tiebreaker' rules which will consider the following:
- whether the ATO previously identified an account as a stapled super fund
- how recently contributions have been made to each of the accounts
- the account balances
- how recently each of the accounts were created.
If employee is concerned how the tiebreaker rules will be applied, the employer should recommend the employee to complete the super standard choice form to nominate his preferred fund.
Why this change?
The change to the stapled superfund rule is to ensure that individuals do not unnecessarily open a new superannuation account when they change jobs as having multiple super accounts may result in increased account fees, unnecessary insurance and loss of monies.
The new rule will also apply to a contractor who is considered an employee for Superannuation Guarantee purposes (i.e. the contract of the individual is considered to be wholly and principally for his labour).
If you are an employer who requires assistance on how to access stapled superfund details for new employees, please contact our office and one of our tax professionals will contact you.
+61 3 9939 4488