No TFN contributions: The $$ damage
April-15-2011Hello fellow super enthusiasts!
I was doing some critical work on my tablet device last night (trying to increase my high scores is a very legitimate endeavour!) and pondering two of society’s biggest issues….World peace and of course lost super and tax file numbers (TFNs).
Here’s a question: Has taxing no-TFN contributions at the highest marginal tax rate generated behavioural change which has resulted in no-TFN contributions being a thing of the past?
Alright, maybe that is a little bit optimistic.
I took a guess and thought that it made no-TFN contributions worth, say… $50m a year, or maybe at a stretch $100m. What I didn’t expect was to find that in the Taxation statistics 2008-09 report, the figure for no-TFN quoted contributions was over $425m!
TFN use needs to be part of mandated data standards for employer contributions.
Let’s say that again!
TFN use needs to be part of mandated data standards for employer contributions.
It’s time we got serious about lost super and the data quality in the industry…..World peace, well that will have to come second!
So, as an industry participant, what do you think needs to be done? Should we just follow the ‘no ticket no ride’ approach and implement ‘no TFN, no super’?
The faster we solve this one, the faster I can move onto world peace!
Yours in Super,
Hans
Hi Hans,
It would be good provided that those who do not need a TFN (Disabled workers etc) are not disadvantaged. I’m sure that a work around for the very few exeptions could be found. This would mean of course that the illegal under the table workers wouldn’t get super. Not necessarily a bad thing. Probably reduce DASP claims.
TFN should be the member Identifier.
ABN’s (or equiv) for employers.
Regards,
not to mention the administration costs (for both the super administrators and the ATO) of refunding the TFN tax to people who do go on to provide thier TFN.
The mind boggles.
Hans,
I think providing a TFN should be the ‘price’ to be paid for participating in the tax benefits that the superannuation system provides.
No TFN – no tax benefits – no super!
Cheers
Graham
We are about to release a change into Production that will allow users to ‘no match’ ( members are not to be merged ) two member arrangements that have the same TFN. If we are going to use TFN’s as member Identifiers or to accept employer payments for that person, we need some way of ensuring that the TFN we have, a) meets the algorithm and b) belongs to that person.
We are currently conducting a data quality audit for two funds in preparation for the Core Registry data migration. Initial findings show that there are several instances where different members have the same TFN. This kind of issue is more likely to increase if members are forced to provide one. I’m all for raising the minimum data standards for transaction processing, but we need to consider the downstream implications and have approaches ready to deal with them. Having multiple members with the same TFN makes it very difficult to introduce the use of TFN as a primary identifier. E.g. if you receive a member registration where the TFN supplied already exists, how do you know which one is correct? What criteria do we use for determining whether it is indeed the same member? If not, what do we do? How does this impact employer contributions while we investigate?
Food for thought!
Hi Mark,
The old ‘oh no that TFN already exists, how do we know which member it belongs to’ problem! You’re right, there are issues across the industry with data quality and TFNs are in no way exempt from this. This is why it’s important that we progress towards a member ID verification tool using TFN (oooh, I can feel an acronym coming on), whereby TFN’s can be verified in real time (or at least pretty darn close to real time) with the ATO. This means we can determine whether they belong to the actual member or not. Doing this would improve the security of the system, reduce errors and clean up duplicated data. Now, time for a cup of tea….
Yours in Super,
Hans