Are you up to speed on the process to rollover benefits statement of a member of an SMSF?

Are you up to speed on the latest process to rollover a member of an SMSF?

Rollovers from one SMSF to another must comply with technical requirements ... we have summarised them to save you time.

Case study around rollover benefits statement

John and Mary have an SMSF. John has decided to establish his own SMSF where he will be the sole member of the Fund and will act as the sole director and sole company secretary of the corporate trustee.

The following steps are required are to transfer his entire member balance to his new SMSF as the exiting member:

John must request his benefits be transferred to his newly establishment SMSF and to do this h3e must complete a Transfer Request (ATO Form 75359) which enables an existing member to request a rollover of their whole super balance to either an SMSF or other eligible super entity.

The current trustee of John and Mary’s SMSF must be satisfied that any nominated receiving fund is a regulated superannuation fund, approved deposit fund or retirement savings account. It must also accept the transfer request and authorise payment of the exiting member’s benefit to the trustee of the receiving superannuation entity. ATO rollover.

The ATO has recently advised that APRA-regulated and SMSFs that receive a request to rollover their member’s super balance to an SMSF must use the SMSF verification service (SVS) to verify the SMSFs details before making the rollover in accordance with Regulation 6.33E of the Superannuation Industry (Supervision) Regulations 1994 (‘SISR’).

The purpose of the SMSF verification service (SVS) is to:

• determine the SMSF status (i.e. is the SMSF a ‘Complying’ or ‘Regulated’ fund);
• verify the Tax File Number (‘TFN’) of the member requesting the rollover is associated with the SMSF;
• ensure that no verified date of death exists for the member requesting the rollover;
• ensure that SMSF bank details are held by the Australian Taxation Office (‘ATO’); and
• an Electronic Service Address (ESA) is held by the ATO.

The SMSF verification service (SVS) will either provide a verified or non-verified response. The SMSF can only proceed with a rollover once it has received a verified response. For non-verified responses, the SMSF/member in order to re-initiate the rollover should contact the ATO and confirm their details.

In cases where an SMSF is prevented from using the SVS system (ie: the SMSF does not hold the member’s TFN or the SVS is not operational or available for an extended period of time) the SMSF/member is required to request and submit a manual verification process to SuperCRT@ato.gov.au.

The trustee must issue a “Rollover Benefits Statement” to John’s new SMSF within three days of payment of the benefit using the SuperStream data and payments standards. If the rollover SuperStream standard does not apply, the trustee must complete a Rollover benefits statement (RBS) or a Death benefit rollover statement (DBRS) to the receiving fund within seven days of paying the rollover along with a copy to the existing member within 30 days of payment of the benefit. 

Important note:  from 1 October 2021, SuperStream must be used to digitally rollover any member benefits from and to an SMSF. Trustees can provide the Rollover Benefit Statement to the receiving fund by sending the information electronically via SuperStream. If this is not available to the trustee they must provide a paper statement to the receiving fund using the ATO Form NAT 70944.

A copy of the Rollover Benefits Statement (ATO Form NAT 70944 or a similar form containing the equivalent information) must also be provided to the relevant member within 30 days of the rollover payment.

His benefits must be paid as soon as possible after the acceptance of the transfer request but, in any event, must be paid within 30 days. The payment of the exiting member’s benefit will cause the exiting member’s membership to terminate.

As there is a change of member in John and Mary’s SMSF, Mary being the sole member of the Fund, will need to notify the ATO of John’s exit from the fund within 28 days of John ceasing to be a member. Mary can notify the ATO by completing Form 3036. The ATO will also need to be notified of any change in trustee/director. Form 3036 can also be used for this purpose.

As the trustee of John and Mary’s SMSF is a corporate trustee, John must resign in writing as a director of that company at the time of the rollover. Mary must notify ASIC that John as the exiting member is ceasing to be a director of the corporate trustee. Mary must complete the online ASIC Form 484 within 28 days.

For further information, please call SUPERCentral on (02) 8296 6266 or email info@supercentral.com.au