Payday Super requires employers to pay superannuation contributions alongside salary and wages. This payment must arrive in the employee’s super fund within 7 business days, unless an exception applies. Otherwise, late or missing super can incur a hefty ATO penalty.
These new rules leave little room for error. Businesses that enter the wrong information in their systems could waste valuable time (and money) sending contributions to the wrong place. To stop this, the ATO has introduced membership verification requests as a compliance requirement for Payday Super.
Here’s what small businesses need to know to stay compliant in their payroll software.
What is a Member Verification Request (MVR)?
The membership verification request (MVR) is a digital notification system to help employers confirm their employee’s super fund membership details before sending superannuation guarantee contributions. MVRs check that the employee is a member of a particular super fund and that the fund can accept SG contributions for the employee.
MVRs are part of the latest SuperStream update to help businesses comply with Payday Super. It was designed to reduce contribution rejections, cut the time needed to correct rejections, and provide employers with accurate data on employees’ super funds.
Why MVRs Matter Under Payday Super?
Payday Super adds significant time pressure on employers to make super contributions. Businesses have only 7 business days to pay super correctly into their employee’s nominated fund, so they can’t afford mistakes that take time to fix. Employers also need to be informed about mistakes or rejections from super funds in a timely manner.
Previously, super funds could take up to 20 business days to inform you of a rejection. Now, with MVR, notifications regarding a super payment can occur within 24 hours.
When Employers Need to Use an MVR
There are particular scenarios where an MVR is mandatory for employers making contributions under Payday Super:
- New employees. MVRs are mandatory when an employer sends their first superannuation contribution to a new employee.
- Employee switches funds. When an employee switches funds, employers need to verify the correct fund with an MVR. (Essentially, your first time paying into a fund needs an MVR).
- Corrections after rejection. An MVR is required when a contribution is rejected because the fund details are incorrect.
In these cases, businesses must act, send an MVR, and obtain the correct information.
How the MVR Process Works
MVRs are digital notifications between a business’s payroll software and an employee’s super fund. So how does it work? The process is fairly straightforward:
- Employee provides the fund information to their employer. Depending on the software you use, onboarding processes like Reckon Mate can automate this for employers, so employee information is fed directly into your payroll software.
- Once an employee updates their fund details, the employer sends an MVR to the relevant super fund.
- When the super fund receives the MVR, the fund validates the request and responds within 24 hours.
- The employer can proceed and send contributions for that employee.
What happens when an MVR fails?
An MVR can fail for a number of reasons, such as mismatched member details, incorrect account information, or an ineligible fund being nominated (a super fund may not be onboarded with MVR). If any of these happen, employers receive a rejection notice explaining why. This comes as an alert specific to your software or super clearing house.
The ATO has given all super funds until March 2027 to comply with MVR. If you aren’t using payroll software or super clearing houses that enable MVR by that time, you won’t be able to comply with Payday Super.
Using Reckon Payroll for Membership Verification Requests
Reckon Payroll includes membership verification requests as part of its payroll software, via Beam. By using Reckon, users will have access to:
- Verification requests. In Reckon Payroll, employers can submit MVRs through Beam to verify employee super details before lodging SuperStream contributions.
- Clear verification statuses. In Reckon Payroll, users get clear verification statuses, so they can act quickly.
- Visibility from the payroll dashboard. With a dashboard plug-in, Reckon Payroll users can view their employees’ statuses, making MVR notifications easy to access.
- Alerts when a pay run is marked as paid. Reckon Payroll has a built-in alert system that notifies users of MVR statuses.
- Easier error resolution. Upon rejection, users receive the exact reason and solutions for correcting the request.
By using payroll software like Reckon, employers can make sure their business remains compliant with Payday Super.
