Q&A: Can an SMSF accept super contributions if it's status is "Pending"?

Q: Can contributions be accepted by a newly established SMSF whose status is “pending” on the super fund lookup?

It is a good question. It’s one that I’ve seen a bit of lately with some delays with the ATOs recording system. Just let me give some background to this question. The ATO has a system that shows the status of superfunds. So when we set up a super fund, it gets put onto what’s called ‘Super Fund Lookup’. It’s the ATO system of registration. It just shows what super funds exists and what their status is.

Now, when we apply to set up an SMSF and we apply for tax file numbers and ABNs and registration, the ATO carries out a whole series of checks on that application process and the proposed trustee members before they say it’s a compliant fund. That can be as short as two or three days, but the rules allow the ATO up to 56 days to process that application.

So when we initially apply to the ATO for our SMSF to be established, it will have a status showing as Pending. And that means essentially, ‘yes, we’ve received the applications and we’re going through our background checks and balances.’ At the point in time, while it’s still showing Pending, employees should not make any payments to the fund while it’s showing as Pending.

And if you’ve got money in other funds that you’re rolling over, that won’t happen or should not happen whilst the status is Pending. So there are rules around employers making contributions, and they need to be made to a complying super fund. There are rules around rollovers from one fund to another, and that rollover can’t occur unless it’s a rollover to a complying super fund.

So whilst the status is showing as Pending, it has not yet received its complying status. Now, once this process has gone through, once the ATO has carried out it’s checks and balances on the members, that will then change the status of the fund to be registered. And at this time, the fund is triggered as being complying. And at this stage, you could then apply for rollovers to occur and for a nomination of your SMSF to receive employee contributions.

Now, the ATO will then issue the fund with a notice of compliance and it will be displayed as compliance. That can take some time afterwards. So it’s only the registered status time where we look at asking employers to contribute to the fund or to apply for rollovers.

This Q&A is taken from one of SuperGuide’s regular members Q&A webinars.

About the author

Garth McNally

Garth has worked in the Australian Superannuation industry for over 20 years with a specific focus on self-managed super funds. He provides ongoing support and training to individuals as well as to professionals working in the superannuation area, including advisers, accountants and lawyers. He is a regular contributor to industry publications and to the leading professional bodies including Chartered Accountants Australia & New Zealand (CA ANZ).