ATO ID 2005/120: Choice of superannuation fund: Contributions made under or in accordance with a State award
Date of decision: 23 April 2005
Year of income: Year ended 30 June 2005
Business line: Superannuation

Issue
Will a contribution made to a superannuation fund, as specified under or in accordance with a superannuation clause contained in a State industrial award, meet the choice of superannuation fund requirements in subsection 32C(8) of the Superannuation Guarantee (Administration) Act 1992 (SGAA)?

Decision
Yes. A contribution made to a superannuation fund as specified under or in accordance with a superannuation clause contained in State industrial award, where the superannuation clause creates a separate and enforceable legal obligation, will meet the choice of superannuation fund requirements in subsection 32C(8) of the SGAA.

Facts
The employee is employed under a State industrial award (the award). The award contains a superannuation clause which states that federal legislation such as the SGAA governs the superannuation rights and obligations of the parties to the award. The superannuation clause further states that superannuation contributions must be made to one of several superannuation funds listed in the award, or to a fund that complies with the legislation that governs the superannuation rights and obligations of the parties.

Reasons for decision
Summary: The choice of fund requirements in the SGAA require employers to give eligible employees the right to choose which complying superannuation fund or retirement savings account will receive their superannuation guarantee (SG) contributions. There are some circumstances in which an employer will not be required to offer choice to an employee. For example, an employer will not be required to offer choice to an employee where the employer is making contributions to a fund for the benefit of the employee under, or in accordance with, a State industrial award. A contribution can be made under, or in accordance with, a State industrial award if there is a superannuation clause in the award which creates a separate and enforceable legal obligation. The making of a contribution which satisfies this obligation will meet the choice of superannuation fund requirements. Mere reference to superannuation in the award which does not require the employer to do anything will not satisfy the requirements of subsection 32C(8) of the SGAA In the circumstances of this case, the employee is employed under a State industrial award. The award contains a superannuation clause which states that federal legislation such as the SGAA governs the superannuation rights and obligations of the parties to the award. The award further states that superannuation contributions must be made to one of several superannuation funds listed in the award, or to a fund that complies with the legislation that governs the superannuation rights and obligations of the parties. In this situation, where the employer actually makes a contribution to a superannuation fund so listed under the superannuation clause in the award, or to one which complies with the requirements of the relevant legislation, the contributions will be regarded as having been made under, or in accordance with, the State industrial award which satisfies the requirements of subsection 32C(8). Employers making such contributions will not be required to offer choice to those relevant employees in accordance with paragraph 32NA(2)(a). Note: Since the above decision was made, amendments have been made to Part 3A of the Superannuation Guarantee (Administration) Act 1992. Stapled fund rules were inserted into the choice of fund requirements and are effective from 1 November 2021. Further information on the stapled fund rules can be located at www.ato.gov.au .

Legislative references: Superannuation Guarantee (Administration) Act 1992 section 32C subsection 32C(8) paragraph 32NA(2)(a)
Subject references: Superannuation contributions for employees Superannuation guarantee contributions