Choice of Fund Rules

Extra step for employers to comply with Choice of Fund Rules: stapled super fund details for new employees from 1 November 2021

From 1 November 2021 employers have an obligation to obtain the stapled super fund details from the Australian Tax Office (ATO) for any new employee where the employee does not choose a superfund on their super choice form.

Employers may need to request stapled super fund details when:

  • your new employee starts on or after 1 November 2021
  • you need to make super guarantee payments for that employee, and
  • your employee is eligible to choose a super fund but doesn’t.

Contractors who are paid mainly for their labour, and are considered to be employees for superannuation guarantee purposes also fall within these rules. As do employees that are either temporary residents or employees covered by an enterprise agreement or workplace determination made before 1 January 2021.

The main reason for this change is to stop employees having multiple or unwanted superannuation accounts incurring extra administration fees when they move from one employment to another.

What is a “stapled super fund”?

A “stapled super fund” is an existing super account which is linked, or “stapled”, to an individual employee and follows them around when they change their employment.

The ATO will hold details of an existing super account which will be “stapled” to an individual.

New steps

When a new employee starts in your business, you must first comply with “choice of fund rules”, but in the event no choice is given you will need to request the new employees stapled super fund details from the ATO. The changes mean that the employer cannot simply make contributions to the company’s default fund as they currently do (although they may be able to do so but only in certain circumstances). If your employee has chosen a super fund, you can pay super contributions to their nominated fund.

Failure to meet your choice of super fund obligations and your super guarantee (SG) obligations, may result in the payment of additional penalties and charges, on top of the super guarantee charge (SGC).

How to request details of your employee’s “stapled super fund”?

You, your authorised representative, or tax practitioner will be able to request your employee’s stapled super fund details after you have submitted a Tax File Number declaration or Single Touch Payroll pay event linking you to them using ATO Online Services.

Employee’s details will be required, including their:

  • TFN – an exemption code can be entered where an employee cannot 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.

The ATO Online Services will work out and display the details of the new employee’s “stapled super fund” within minutes.

No “stapled super fund”?

If your new employee does not choose a super fund and the ATO has advised you that they do not have a stapled super fund you can pay their super into your default fund, or another fund that meets the choice of fund rules.

Bentleys NSW is committed to helping employers understand and become familiar with the new requirements related to stapled super funds and to make this change as easy as possible. If you would like any assistance, please give us a call on +61 2 9220 0700.

Disclaimer: This information is general in nature and should not be relied on as advice. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs and seek professional advice before making any decisions based on this information.