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Super Stapling – how this works and what you need to do to comply with the new rules

Under the previous super scheme, where an employee joined a new employer and did not provide their super fund account details, their contributions would be paid to the employer’s default super scheme.  This has resulted in approximately 6 million unintended or ‘lost’ super fund accounts and a detrimental outcome for people when they plan to cease working. Super stapling was announced in the 2020 Federal Budget and is an initiative to ensure super fund accounts remain connected to their intended recipient.  Below are some key points about the initiative and how to comply with it:

  • Started 1 November 2021.  Any new employee joining a business now falls under the super stapling guidelines
  • Review your employment contract to ensure any superannuation clauses comply
  • If a new employee provides a super choice declaration, then that fund is the one to pay contributions into and there is no need to check the stapled fund
  • When a new employee joins and does not provide super details, the employer must apply to the ATO by logging in to the online services.  An employment relationship must have already been established prior to this by either submitting a Tax File Declaration for the employee or a Single Touch Payroll (STP) event.
  • If an employee has multiple super funds, the ATO will determine which is the ‘stapled’ fund.  Generally, this will be the latest fund to receive contributions.

A detailed guide to the above including a webcast can be found on the ATO website using the link below:

www.ato.gov.au/Business/Super-for-employers/Setting-up-super-for-your-business/Offer-employees-a-choice-of-super-fund/Request-stapled-super-fund-details-for-employees

Single Touch Payroll Phase 2 – starting 1 January 2022

The Government announced the expansion of the Single Touch Payroll initiative in the 2019-20 budget and that expansion; Phase 2; takes effect at the start of the next calendar year. STP Phase 2 means that employers will report pay, tax and super information via payroll software to the ATO in more detail than previously which will reduce the burden of reporting where more than one government agency is involved. It will also assist Service Australia customers to get the right payment at the right time.  Some of the key information which will need to be reported is as follows:

  • Commencement date
  • Employment basis
  • Tax treatment
  • Income types – disaggregation of gross
  • Allowances
  • Foreign employment income
  • Salary sacrifice arrangements
  • Deductions

This list is not exhaustive and more information can be found on the ATO website using the link below:

www.ato.gov.au/Business/Single-Touch-Payroll/In-detail/Single-Touch-Payroll-Phase-2-employer-reporting-guidelines

Check with your Digital Service Provider (DSP); your payroll software provider; for details of their arrangements for transition to STP 2.  Most importantly, some DSP’s are negotiating with the ATO for a deferral of the 1 January 2022 deadline to provide more time for them and their customers to be able to comply.  More information on the STP Phase 2, including transition arrangements, can be found on the ATO website:

www.ato.gov.au/Business/Single-Touch-Payroll/Expanding-Single-Touch-Payroll-(Phase-2)

Author: Cate Peat