What super stapling means for employers

If there’s one certainty in business these days, it’s constant change. Now there’s an extra step you need to take with new employees to comply with the superannuation choice of fund rules.

From 1 November 2021, whenever a new employee starts with your business and they don’t select a super fund for their Super Guarantee (SG) contributions, you will need to ask the ATO for their stapled super fund details.

New fund choice rules

Under the new rules covering choice of super fund, every employee is now stapled (or linked) to an existing super account that follows them for life as they change jobs unless they choose otherwise.

This reform to the super rules was introduced by the Federal Government to reduce duplicate account fees and insurance premiums paid by employees on their super. Up until now, many employees ended up with a new super account each time they started a new job, often losing track of multiple accounts and unnecessary fees along the way.

A stapled fund can be any type of eligible super fund, including SMSFs and defined benefit super funds.

The new stapling rules do not affect your existing employees, so in most situations you will only need stapled fund details if a new employee fails to give you a choice of fund form.

You must, however, request the stapled super fund details for any new employee who is a temporary resident or who is covered by an enterprise bargaining agreement or workplace determination made before 1 January 2021.

If the employee doesn’t have a stapled fund, you can make your SG contributions into your employer default MySuper product (unless they are subject to an enterprise bargaining agreement or modern award stipulating a prescribed super fund).

What to do from 1 November 2021

To ensure you’re ready to request stapled fund details, check you have enabled online services with the ATO and your authorised representative has all the necessary permissions in place.

When you onboard a new employee on or after 1 November 2021, the first step of offering your employee an ATO Superannuation Standard Choice Form within 28 days remains the same. If they fail to choose a super fund, you will then need to check with the ATO whether or not your employee has a stapled super fund.

Before you can make a stapling request, however, you need to have lodged either a Single Touch Payroll (STP) event or a tax file number (TFN) declaration for your new employee with the ATO.

If your new employee has a stapled fund, you simply pay your SG contributions into that fund. Employees always retain the right to change super funds if they wish and their new super fund then becomes their stapled fund.

More than one super fund

If your employee has more than one super fund, they are automatically stapled to the fund that most recently received a super contribution on their behalf. Where there is more than one active super fund, the most appropriate fund (such as the one with the largest balance), will be selected by the ATO.

The new stapled fund rules don’t mean your business can avoid nominating a default super fund to receive your SG contributions.

If your new employee doesn’t have a stapled fund, you will need to make your contributions into this fund.

The reforms mean it’s also a good idea to check whether the superannuation clauses in your employment contracts for new employees cover the possibility of super contributions being made into an employee’s stapled fund.

As an employer, if you fail to meet your obligations under the choice of fund rules – such as checking for a stapled fund – additional penalties may apply on top of the normal SG Charge (SGC) penalties.

If you would like more information on stapling, or the rules about making contributions for your employees’ super in general, please contact our office today and speak to a Financial Adviser on 03 5120 1400 or send any questions you may have via our website contact page.

Material contained in this publication is a summary only and is based on information believed to be reliable and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.

Years of Service

RGM Staff, Back – L to R: John Saxton, Prue Cox, Pearse Morgan, Melissa Wigley, Mark Reidy. Front – L to R: Daniel Bremner, Mardi Salienko, Joe Auciello, Reni Mincella.

At the end of last year we presented our staff with 10, 20, 30 & 40 years of service certificates to recognise their commitment to our firm. The dedication our employees have shown over many years deserves to be recognised, as each employee has played an important role within our firm. The qualities such as organisational skills, leadership, honesty, strong work ethic and teamwork are all character traits worthy of recognition.

We are proud to have all our employees as part of our work family here at RGM and we congratulate the following staff on their years of service:

Platinum  – 40 Years

Pearse Morgan

Gold – 30 Years

Phil Lane

Silver – 20 years

Mark Reidy

Anita Baxter

Bronze – 10 Years

Reni Mincella

Colleen Mills

Joe Auciello

Mardi Salienko

Melissa Wigley

Christine Turra

Bronze – 10 Years

Daniel Bremner

Jason Low

Prue Cox

John Saxton

New tax shortcut for employees working from home

With many people now working from home because of COVID-19, some of the expenses your employer normally covers – such as electricity, heating and cooling – are coming out of your pocket instead. 

Some employers provide a daily allowance to help with these additional costs, but if not it’s important to claim your extra expenses at tax time. 

To simplify things, the ATO has announced shortcut rules if you find yourself working from your kitchen table or sofa for the first time. 

New shortcut rules

Under these temporary measures, if you are working from home due to COVID-19 you can claim a simplified tax deduction of 80 cents per work hour for your running expenses. 

Your running expenses include things like lighting; heating and cooling; cleaning; and office supplies like printer paper and stationery. The shortcut rate also covers the cost of your internet, phone and computer equipment. 

The decline in value (or depreciation) of the furniture and fittings you use in your home office is covered too. 

Items such as tea, coffee and toilet paper, can’t be claimed. Neither can expenses such as rent, mortgage interest, property insurance, rates and land tax. 

Substantiating your claim

Before you get too excited, you are only entitled to a deduction for expenses related to earning income. You must have actually spent the money and not been reimbursed. 

Fortunately, the shortcut method only requires you to keep a record of the number of hours you worked from home as evidence of your claim. This can be in the form of a time sheet, or an Outlook calendar or diary entry. 

If you are audited by the ATO, it’s likely you’ll also be asked for supporting evidence from your employer. 

The shortcut arrangements are in place for running expenses incurred from 1 March to 30 June 2020. The ATO intends to review the arrangement for the next financial year as the COVID-19 situation progresses. 

Eligibility for the shortcut rules

The simplified rules are only available to employees working from home. If you are a sole trader or run a small business from home, you must use the normal business deduction rules. The shortcut rules allow multiple people living in the same house to claim the new 80 cents rate, so both members of a couple can claim a deduction at tax time. You’re not required to have a dedicated work area, which is a requirement under the normal rules. 

If you normally work from home a few days a week, you need to keep two sets of records – one covering the period from 1 July 2019 to 29 February 2020 and a second one covering the period from 1 March to 30 June 2020 if you decide to use the shortcut method. 

Current rules for working from home

Although the simplicity of the shortcut method is attractive for claiming your running costs, you can choose to use the pre-existing rules if you prefer. 

Currently there are two ways to calculate your running expenses: claiming a fixed rate of 52 cents per work hour, or calculating your actual expenses. 

Under the fixed rate method, you claim 52 cents an hour for your running expenses. You then work out separately your costs for phone and internet usage, computer consumables and stationery, and the depreciation on your computer. To claim, you need to keep records of actual hours worked, or a four week diary to show your usual working pattern. 

Dedicated home offices

If you have a dedicated work area at home, you can choose to calculate your actual running expenses. These costs (plus depreciation on your equipment, furniture and furnishings over $300) need to be apportioned into personal and work related amounts. 

For your phone and internet expenses, you can claim up to $50 with limited documentation, or calculate your actual expenses and apportion them. 

Before opting for the new shortcut, it’s worth having a chat, as the best method depends on your individual situation. Although there is less administration with the shortcut, it may not provide you with the biggest tax deduction. 

Call us on 03 5120 1400 to discuss how working from home will affect your tax preparations this financial year.

Material contained in this publication is a summary only and is based on information believed to be reliable and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 or RGM Finance Brokers Pty Ltd ABN 81 330 778 236 (RGM) that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.