SMSF trustees planning on switching electronic service address (ESA) providers do not need to wait until the end of the financial year to do so and should act now to ensure they can receive contributions under the coming Payday Super regime, a service provider has stated.
Colladium managing director John Delaney said the upcoming closure of the Australia Post SMSF Gateway on 30 June has been a driver for some SMSFs to seek a new ESA provider so they can continue receiving contributions via SuperStream. However, given Payday Super starts on 1 July, that shift should take place as soon as possible.
“It is common for SMSF trustees to leave it to the last minute, but they can switch today. The earlier they do, the more time they have to resolve any issues that arise and inform their employer that their fund’s ESA has changed, so when they receive their pay, their super will also go straight into their fund,” Delaney told smstrusteenews.
He added having an updated and operational ESA was also important to avoid employers facing charges and superannuation guarantee (SG) contributions being redirected.
“With Payday Super coming into effect, employees with SMSFs will receive contributions more frequently, at the same time as their wages. If their employers fail to pay those on time due to an ESA issue, they can be penalised and that may strain relationships with their employees,” he stated.
“Additionally, the contributions will fail or be delayed. According to comments on the ATO’s website, under Payday Super, an employer may just create a default super fund account and send the contributions there to avoid the penalty charge.”
He observed that despite advance notice from the ATO of the closure of some ESA providers and the need to be ready for Payday Super, some SMSF trustees will only find out their address is no longer suitable after 1 July when an SG contribution is not made, but they can easily rectify the problem.
“The first step is to find a reliable alternative, which means an ATO registered ESA provider. Trustees should then look for one that offers similar functions and features, allows them to get an ESA instantly and helps them keep receiving contributions with no interruption,” he indicated.
“Lastly, they need to inform their employers because if employers keep using the old ESA, that will cause a gap in contributions.”
Colladium SMSF Gateway, which provided the back-end service for Australia Post, had been designed to make the process simple for SMSFs moving from other ESA providers, including SuperChoice, which closed in May, and Australia Post, he noted.
“Trustees and advisers can create accounts online, add their SMSFs and receive a new ESA in minutes. Colladium SMSF Gateway also provides a pre-filled ESA form that they can download and send to employers, which will make the transition easier,” he said.