Employers will have an extra six months to adjust their payroll systems to comply with a government-mandated superannuation data processing standard, iTnews can reveal.
The Australian Tax Office has opted to lift its foot from the accelerator on the $1.5 billion dollar "SuperStream" superannuation transaction modernisation project, concerned that a "big bang" approach could cause system issues.
SuperStream sets data standards for super funds to allow for smoother rollover and consolidation of funds for employees. It is expected to save the industry and employers over a billion dollars each year.
The project is expected to meet its first six-month milestone at the end of the calendar year. By Wednesday next week, all regulated super funds need to be processing superannuation rollover transactions over government-approved gateways.
This deadline was originally set for July 31, 2013, but the ATO decided to phase it in over six months to give the industry more time to prepare.
It now appears the ATO will offer the same six months grace for employers.
The Australian Taxation Office (ATO) had used powers given to it under the Superannuation Industry Supervision Act to direct any Australian organisation with more than 20 employees to ensure their payroll systems were able meet a deadline to start processing employee super contributions via the same mechanism from July 1, 2014.
The Affiliation of Superannuation Practitioners (ASP) has revealed to iTnews that the ATO has scaled back these expectations.
The Tax Office has confirmed to iTnews that it is currently consulting with the industry to consider changes to legislative instruments “to spell out more detailed transition arrangements” for the July changeover.
The ATO said that it would consider giving employers a 12-month window to take advantage of "in determining when to complete their transition-in to the standard”.
It has also proposed to limit take up of the new payment system to a small group during the first three months of the transition.
“While the first three months of induction will see a constrained volume of contributions and number of employers using the new standard, ramp up then occurs from that point on," an ATO spokesman said. "This allows progressive take-up of the standard rather than a ‘free for all’, which would have inherent risks.
“This emulates the successful process which the ATO moderated with APRA funds for the implementation of SuperStream rollovers. It is based on a sound risk mitigation strategy designed to ensure that any early IT or processing issues can be isolated, diagnosed and corrected without causing system-wide effects."
The ATO’s spokesman said that the agency would run an Expression of Interest early next year to determine an initial induction group for July 1, 2014.
The ATO is funding its end of SuperStream, a recommendation of the Cooper review, out of a $497 million levy on super fund members. Super funds and custodians, employers and payroll providers are expected to spend a further billion dollars reaching interoperability standards for the new gateway system.
ASP spokesman Hans van Daatselaar expects the next phase of SuperStream to be far more complicated than the first.
The initial rollover transition involved around 3,000 regulated funds, whereas the next phase will require the cooperation of over 850,000 employers and 250,000 self-managed super funds.
“Is it going to be smooth? Probably no. Is it easy? No. Will everyone be ready? No. But do we have to make sure this is going to be successful? Yes,” Mr van Daatselaar said.
Mr Daatselaar said that the industry was grappling with the scale of cooperation and collaboration required.
“The superannuation industry loves black-and-white scenarios… we’re not very good with grey. There’s lots of grey here because we’re not (entities) working alone, we’re working with other entities and groups ultimately delivering on the promise. That means we have to do business differently.
"I’ve been in the industry for 20 years and I’d never seen something requiring this level of collaboration before until we started working on the SuperStream standard for rollovers,” he said.