Getting Technical – Stapling Of Super Funds



The Your Super, Your Future Legislation Was Passed Into Law On 24 June. A Key Feature Is The New Superfund Stapling Rules Which Will Impact The Many Bookkeepers Who Handle A Client’s Payroll, Superannuation And The Setting Up Of New Employees In These Systems. This New Measure Commences In Just A Few Short Weeks On 1 November 2021! 

The New Rules Ensure That When A Worker Moves Jobs The Super Fund That They Used With Their Former Employer Will Be ‘Stapled’ Automatically To Them, To Protect Their Retirement Savings Being Drained By The Costs Of Unintended, Multiple Accounts.


Unintentional multiple accounts are created when a worker changes jobs and does not nominate a superannuation fund to the new employer under the super choice system. For background, under Australia’s compulsory superannuation system, employers must nominate a superannuation fund on behalf of their workers (default funds). Employers pay a worker’s compulsory contributions into their default fund if a worker does not choose their own fund. If you change jobs multiple times over your working life and do not nominate a superannuation fund, you could end up with multiple superannuation accounts, all charging their own fees and insurance premiums.

The latest data from the ATO indicates there are approximately six million multiple accounts held by 4.4 million people. Over one-third of multiple accounts are held by people aged 35 or younger. These multiple accounts collectively charge $450 million in fees per year. Eliminating these multiple accounts, through stapling, will eradicate these fees and, in turn, boost the retirement savings of affected individuals.

The New Rules

Under the new rules, effective 1 November, an employer can comply with the choice of fund rules by making contributions to the stapled fund of an employee who:

  • started their employment on or after 1 November 2021
  • has a stapled fund, and
  • has not chosen a fund to receive superannuation contributions.

Employers can continue to make contributions to their own default fund in compliance with the choice of fund rules if the employee does not have a stapled fund.

To support the new stapled fund rules, the amendments allow employers to request that the ATO identify any stapled fund held by an employee. This request must be made in the approved form (see later). Where a valid request is made, the ATO must notify the employer they can identify a stapled fund for the employee as soon as practicable.

Identifying The Stapled Fund

You’ll be able to request an employee’s stapled super fund from the ATO after the employer (or their BAS Agent or Tax Agent on their behalf) has submitted a Tax file number declaration or Single Touch Payroll pay event linking the employer to them. There is no limit to the number of requests you can make. To request a stapled super fund, employers, or their authorised representative such as their BAS Agent, need to:

  1. log into ATO online services.
  2. enter the employee’s details, including their:
    • TFN – an exemption code can be entered where an employee cannot provide their TFN, but this could result in processing delays
    • full name – including ‘other given name’ if known
    • date of birth
    • address (residential or postal), if TFN not given.

The ATO’s online system will use rules based on the regulations to work out and return a stapled super fund in response to a request.

You will receive the response on-screen. You should be notified of the result of the stapled super fund request within minutes.

ATO Compliance Approach

The new superannuation stapled fund rules will see the ATO adopt a gently-gently approach to employer compliance. The new guidelines are contained in SPR 2021/D1 – choice of fund – written guidelines for the reduction of an increase in an employer’s individual superannuation guarantee shortfall determination 2021.

A transitional period will apply from 1 November 2021 until 31 October 2022. During this time employers will, in the first instance, be provided with help and assistance to comply with the stapled fund requirements. The Commissioner will reduce any choice shortfall to nil where that shortfall arose due to an emloyer’s lack of knowledge of the stapled fund requirements (as opposed to an intentional disregard). This lenient transitional approach is confined to the stapled fund changes – not to existing superannuation choice rules. From 1 November 2022, the transitional approach will end. By that time, penalties may be applied on a stricter basis.

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What’s BOOT test


The better off overall test (BOOT) considers the terms that are more beneficial and less beneficial to employees in an agreement, compared to the terms in the relevant modern award.

The better off overall test requires the identification of agreement terms which are more beneficial, and the terms which are less beneficial, and then an overall assessment is made as to whether employees would be better off under the agreement than under the relevant award.

The better off overall test is not applied as a line by line analysis. It is a global test requiring consideration of advantages and disadvantages to award covered employees and prospective award covered employees. The application of the better off overall test therefore requires the identification of the terms of an Agreement which are more beneficial to employees when compared to the relevant modern award, and the terms of an Agreement which are less beneficial and then an overall assessment of whether an employee would be better off under the Agreement.

The Commission must be satisfied that each award covered employee and each prospective award covered employee would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.

The question posed by the better off overall test is not whether each employee is better off under the Agreement compared to their particular existing working arrangements but whether they are better off overall if the Agreement applied rather than the relevant modern award.

An agreement may pass the test even if some award benefits have been reduced, as long as overall those reductions are more than offset by the benefits of the agreement.

Individual flexibility arrangements must be disregarded
When determining whether employees will be better off overall the Commission must disregard any individual flexibility arrangement agreed to by an employee and employer under the flexibility term in the relevant modern award.

This is because it is assumed that any arrangements made under the flexibility term in a modern award would be considered in the negotiating process, and potentially will form part of the agreement, or be negotiated again under the flexibility term in the agreement if approved.

When is the test time?

The better off overall test is applied as at the test time – this is the time when the application for approval of the agreement was made (the date the application was lodged with the Commission).[1]

Who is an award covered employee?
An award covered employee for an enterprise agreement is an employee who:

is covered by the agreement, and
at the test time, is covered by a modern award that:
is in operation
covers the employee in relation to the work that he or she is to perform under the agreement, and
covers his or her employer.
Note: The enterprise agreement will only apply to an employee once it commences operation (ie after the agreement is approved by the Commission).

Who is a prospective award covered employee?
A prospective award covered employee for an enterprise agreement is a person who, if he or she were an employee at the test time of an employer covered by the agreement:

would be covered by the agreement, and
would be covered by a modern award that:
is in operation
would cover the person in relation to the work that he or she would perform under the agreement, and
covers the employer.
Prospective award covered employees are considered in the application of the better off overall test because sometimes an agreement may cover classifications of employees in which no employees are actually engaged at the test time. Extending the application of the better off overall test to these types of employees guarantees the integrity of the safety net.