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Hi,
I am currently auditing a fund for FY2021 & FY2022, and I've come across the following facts:
For FY2021, $1,500 as employer contribution was made to one member's account.
For FY2022, $2,500 as employer contribution was made to the same member's account.
The member who has received the contribution was 64 years old in FY2021
These contributions were made on a monthly basis, with varying amounts from the employer's named 'ABN Australia', and notably, they were not processed through common clearing houses like 'SuperChoice' and 'Payclear,' etc.
Questions:
As an auditor, should I be concerned that these contributions were not made via SuperStream?
Would a handwritten paper copy of Payment Summary from the employer be sufficient as the evidence of employer contribution?
Hi Anna,
It's worthy to check if the employer is a related party of the SMSF.
There is a related party exemption to receive contributios via Superstream. See below extracted from: https://www.ato.gov.au/businesses-and-organisations/super-for-employers/paying-electronically-through-superstream/self-managed-super-funds/examples-smsfs-and-superstream
Example 2: SMSF receives contributions only from family business
SuperSavings SMSF has been established for your family, and all members of the SMSF are either owners or employees of the family business. No members receive contributions from other employers.
Because of the direct link between ownership of the family business and membership of the SMSF, the SMSF meets the related party exemption. This means the SMSF doesn't need to receive contributions sent using SuperStream.
Your family business also has other employees who belong to other super funds. Your business will need to use SuperStream to send employer contributions to their funds.
Hello Anna, thanks for your question.
Whilst these contributions should have been made using SuperStream, this is a matter that could be dealt with in a letter to the trustees of the fund (management letter) rather than in an Auditor Contravention Report.
Whilst not the subject of your question, accepting a rollover not using SuperStream would be a matter that should be disclosed in ACR as per the extract from the ACR instructions provided below.
https://www.ato.gov.au/tax-and-super-professionals/for-superannuation-professionals/smsf-auditors/auditing-an-smsf/superstream-smsf-rollovers-and-auditor-reporting-obligations
the rollover is requested on or after 1 October 2021, and
the contravention meets the ACR reporting criteria.
notify the fund trustee(s) in writing
report the contravention to us via an ACR at Section E (Contraventions) provided the reporting criteria is met, and
describe the event as a failure to comply with the SuperStream rules for rollovers
provide the reason why
modify Part B of the SMSF Independent Auditor’s Report if the contravention is material.
The other matter you raise is satisfying ourselves that the contribution (not made through SuperStream) was indeed an employer contribution.
Whilst it is not common practice for PAYG Payment Summaries to be hand-written, this of itself does not mean that the Payment Summary is not authentic.
It is assumed the contributions were Reportable Employer Contributions (RESCs) which is why they are on the Payment Summary.
If the fund member had fully utilised their non-concessional contributions (NCC) cap there could be a risk that they were trying to disguise a NCC as a concessional contribution - although given that these yearly amounts of $1,500 and $2,500 are comprised of contributions made on a monthly basis, it seems unlikely that this was part of an elaborate attempt to hide a small breach of the NCC cap.
Aside from these amounts of $1,500 and $2,500, that were on the Payment Summary, did the same employer make other contributions (SG contributions, for example) for the fund member that were processed through SuperStream? It could be that the employer was not aware as to how to handle a voluntary employer contribution through their payroll software.