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Legislative Instrument

Superannuation Guarantee (Administration) – Choice of Fund – Written Guidelines for the Reduction of an Increase in an Employer's Individual Superannuation Guarantee Shortfall Determination 2021

I, Usha Narain, Acting Deputy Commissioner of Taxation, make this determination under subsection 21(1) of the Superannuation Guarantee (Administration) Act 1992.

Usha Narain
Acting Deputy Commissioner of Taxation
Policy, Analysis and Legislation
Law Design and Practice

8 October 2021

    1.             Name of instrument
    This determination is the Superannuation Guarantee (Administration) – Choice of Fund – Written Guidelines for the Reduction of an Increase in an Employer's Individual Superannuation Guarantee Shortfall Determination 2021.

    2.             Commencement
This instrument commences on 1 November 2021.

    3.             Application
    This instrument provides written guidelines the Commissioner of Taxation (the Commissioner) must have regard to for the purpose of subsection 19(2E) of the Superannuation Guarantee (Administration) Act 1992 (SGAA) in deciding the level of reduction to apply to an increase in an employer's individual superannuation guarantee shortfall under subsection 19(2A).

    4.             Determination
       (1)          Since 1 July 2005, employers who make superannuation guarantee contributions in respect of eligible employees are required to satisfy the choice of fund requirements under Part 3A of the SGAA.

       (2)          If an employer does not satisfy the choice of fund requirements, the employer's individual superannuation guarantee shortfall (including a nil shortfall) for an employee for a quarter is increased under subsections 19(2A) or 19(2B) of the SGAA. This is known as the choice shortfall.

       (3)          The Commissioner has a discretion, under subsection 19(2E) of the SGAA, to reduce the amount of the choice shortfall. All decisions on the reduction of the choice shortfall will be made on a case by case basis, taking into account all of the employer's relevant facts and circumstances.

    Transitional compliance approach for single default accounts

       (4)          From 1 November 2021, additional choice of fund requirements will apply with the single default account (stapled fund) requirements under Division 7 of Part 3A of the SGAA. From 1 November 2021 until 31 October 2022 employers will, in the first instance of non‑compliance, be provided with help and assistance to comply with stapled fund requirements.

       (5)          During this transitional period the Commissioner will reduce any choice shortfall to nil if that shortfall arose due to the employer's lack of knowledge of the stapled fund requirements rather than intentional disregard. This transitional approach applies only to the stapled fund changes to the choice of fund requirements, it does not apply to existing choice rules.

       (6)          From 1 November 2022 the transitional approach will no longer apply as it is expected that employers would have had sufficient time to understand and comply with the stapled fund requirements. Therefore, the Commissioner will apply the general guidelines from