Release Authorities
A Release Authority is issued by the Australian Taxation Office (ATO) when an individual elects to release funds from a Superfund to meet certain ATO tax obligations. When the Superfund receives a valid Release Authority from the ATO, it is authorised to release an amount from the member’s super account.
From 1 October 2021, all Superfunds, including SMSFs must comply with the SuperStream rules when a member elects to release funds from the SMSF for certain types of release authorities.
Failure to comply with the SuperStream rules may lead to a qualified audit report.
Types of Release Authority
You will be contacted by the ATO directly when any of the following event(s) occurs:
- You have exceeded your concessional contributions cap (ECC);
- You have exceeded your non-concessional contributions cap (ENCC);
- You are required to pay the Division 293 tax applicable to high-income earners (Div 293);
- You applied to release funds from the SMSF under the first home super saver scheme (FHSS).
You will be required by the ATO to choose how you make the above payments. One of the options is to release funds from the SMSF. If this is your preferred method, please follow the steps detailed below.
Step1
You Elect to Release Funds from the SMSF
If you prefer to release funds from the SMSF, you need to complete an election form and send it to the ATO for processing via one of the following methods:
- If you have a MyGov account linked to ATO services, it is easier and quicker to sign in to your MyGov account to complete the election form online (preferred method by the ATO);
- Require your personal tax accountant to complete the election form for you using their online services for agents;
- Obtain and complete a paper copy of the election form by phoning the ATO’s publications ordering service on 1300 720 092.
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Warning: You must not release funds from the SMSF bank account at this stage using the Bpay instructions advised on the ATO determination letter. We caution that it is a breach of the SIS regulation if you release funds from the SMSF prior to receiving the Release Authority from the ATO.
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Step2
ATO Issues the Digital Release Authority via the SuperStream Channel
Once the ATO has processed your election form, they will issue a Digital Release Authority to the SMSF via the SuperStream channel.
Upon the receipt of the Digital Release Authority, ESUPERFUND will contact you to confirm whether you wish to proceed with releasing funds from your SMSF and how much to be released by sending a detailed message to your Client Portal Inbox.
Step3
You Confirm the Release Decision and Amount via the Client Portal
You need to visit the ESUPERFUND Client Portal – Member Account - Release Authority tab and complete the “Action Required” item.
If you have changed mind and no longer wish to release funds from the SMSF, you may select “No”. ESUPERFUND will in turn notify the ATO that the Digital Release Authority is unsuccessful and no further actions are required by you.
If you still wish to release funds from the SMSF, please select “Yes” and further advise the amount to be released from the SMSF noting that the amount should not exceed the ATO’s Requested Amount and it should not exceed the member's available account balance in the SMSF.
Step4
ESUPERFUND Advises Payment Methods
After you confirm the decision to release an amount from the SMSF by completing the Step 3 detailed above, ESUPERFUND will advise you of the payment methods by sending a detailed message to your Client Portal Inbox.
Step5
You Arrange Payments to the ATO from the SMSF Bank Account
The next step is that you will need to pay the amount to the ATO from your SMSF bank account in accordance with the payment instructions provided by ESUPERFUND in the inbox message. Please note that ESUPERFUND does not have transaction access to your SMSF bank account and we are unable to authorise any payments on behalf of your SMSF.
To ensure the payment is processed correctly by you, we highlight some key considerations below:
1. You must arrange the payment via Electronic Funds Transfer (EFT) in accordance with the payment instructions provided by ESUPERFUND.
The EFT instructions advised by ESUPERFUND are different from the Bpay information detailed on your ATO determination letter.
We clarify that the Bpay information should only be used by individuals who choose to pay the ATO using their personal money.
Given you elect to release funds from your SMSF, you need to arrange the payment in accordance with the EFT instructions provided by ESUPERFUND in the inbox message.
2. Payment should be arranged within 10 business days.
The ATO requires the Superfund to action the Release Authority within 10 business days from the issue date of the Digital Release Authority.
3. You must transfer the amount in one single transaction.
If your SMSF has insufficient cash, you may need to convert some investments to cash and then transfer the amount in one single transaction.
If the amount exceeds the daily transfer limit of the SMSF bank, you may need to increase the daily transfer limit or contact the SMSF bank directly for alternative options such as a fax authority.
4. You must quote the Payment Reference Number (PRN) at both the "Description" and "Reference" fields so the full PRN appears on both the SMSF's bank statement and the recipient's bank statement.
Please ensure that the PRN has been inserted at both the "Description" and "Reference" fields and it can appear on both the SMSF's bank statement and the recipient's bank statement when you action the Electronic Funds Transfer (EFT).
Step6
You Notify ESUPERFUND of the Payment (If Paid from a Manual Bank Account)
If the amount is paid from the SMSF bank account with automatic datafeed linked to ESUPERFUND within the required time frame, this step can be skipped. This is because we will be able to track this transaction automatically.
However if the amount is paid from a manual bank account (incl. CBA Accelerator), you will need to notify ESUPERFUND of the payment by adding the transaction via the Interim Checklist - Bank page and enter the Payment Reference Number (PRN) at the narration field. This will enable ESUPERFUND to match the transaction with the Digital Release Authority SuperStream message.
Step7
ESUPERFUND notifies the ATO of your Payment
Once ESUPERFUND identifies the payment in the SMSF’s bank transactions, we will notify the ATO that you have released funds from your SMSF via the SuperStream Channel.
We caution that all of the following criteria must be met to enable ESUPERFUND to match the transaction with the Digital Release Authority SuperStream message:
- The amount is paid to the ATO within the required time frame (although the ATO requires payments within 10 business days, we have allowed extra time up to 28 days in case you may require more time to arrange the payment).
- The correct amount is paid in one single transaction (if you split payments, we may not be able to identify the transaction).
- The correct Payment Reference Number (PRN) is used.
- The transaction has been added to the Client Portal if you paid it from a manual bank account (incl. CBA Accelerator).
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Warning: If any of the above criteria is not met, we will automatically forfeit the Digital Release Authority SuperStream message after 28 days from the issue date of the Digital Release Authority and notify the ATO that the Digital Release Authority is unsuccessful.
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Step8
ATO Response Is Received
Usually after a few days, we will receive a response from the ATO. You will be notified of the result via the Client Portal Inbox.
If the Release Authority process is successful, no further actions are required by you. The ATO should credit the amount to your personal tax account and refund any credits to your personal bank account.
If the Release Authority process is unsuccessful, you will be contacted by the ATO directly.