Induction process - Waves 1, 2 and 3

1. Induction process - Waves 1, 2 and 3 Contributions Implementation Working Group Presented by Colleen Gibson Director Australian Taxation Office October 2014

2. 4 August 2014 to 2 November 2014 Current induction: Wave 1 Progress so far.... • Completed 26 cycles with over 5,000 contributions • Trickle feed volumes only to this point, ramp up just beginning • About 97% flowing to APRA funds and 3% to SMSFs • 18 employers have participated in cohort groups • On the employer side solutions – Quicksuper and *Superchoice - has been cross-certified • Clicksuper and OzEDI are currently in progress • LUCRF commences 27 October • MYOB to join in first week of November • Other payroll solutions participating thus far include: • Micropay, Frontier, Attache • On the fund side - 99 USIs with the eight participating fund/groups have been cross-certified. * Pending confirmation APRA Funds • AAS administered funds • AMP • IOOF • CBUS • HESTA • VicSuper • VisionSuper • Macquarie

3. Key learnings • Completing testing prior to induction: Participants must complete third party certification and end-to-end testing (at least two cycles) prior to entering induction. This is a strict entry criteria. • Ensuring message integrity: The schematron should be used rigorously to check message integrity (by both sender and receiver) throughout testing and induction. This will assist in detecting and preventing data logic and format errors, conformance with prescribed business rules and checking of money calculations. • Conversation ID: This must be unique between parties at the message level e.g employer and fund. The sending party must not use the same conversation ID across different messages to different funds. • Payment reference number: This must always be 18-characters as per the specified character set in the MIG – eg using trailing ‘space’ characters if needed to pad out a reference number to the required length. Also refer guidance note on www.softwaredevelopers/ato.gov.au

4. Key learnings • TFN in contributions messages: A high proportion of contributions messages received in some cohorts during induction did not have the employee TFN but instead had another identifier as is allowed by the message structure. Employers need to be reminded that the TFN must be provided where the employer holds it. • Default values being used in optional fields: A default date value (intended only for approved mandatory fields) was used in an optional date field in some member registration transactions during induction. Default values should not be used in optional fields. Any optional field should be omitted if a value is not available. • Schematron error – use updated version: A contributions transaction failed validation during induction because a wrong version of the Schematron was used. Users should consult the SILU website to ensure they are using the correct Schematron version. 

5. Current induction assessment • A few teething problems at the beginning – process improved as we progressed • Nerve centre – at both cohort level and weekly industry review - has gone well • Stakeholders generally feel that the process has gone well, and is setting the stage for the next phase. • Confidence in solutions is beginning to grow – next milestone is to see how volumes are handled and graded diversity in sending solutions

6. Wave 2 – Accelerated Induction Process • 3 November 2014 to 5 December 2014 • Number of players, transaction volumes and tempo are higher than for Wave 1 • A fund must nominate at least one product (USI) per unique registry/administration system to commence • designed to minimise processing volumes where possible • a fund can nominate more than one USI if they choose • Cross-certification will be provided when: • contributions have been successfully received from at least two unique SuperStream messaging sources (employer sending solutions) • on the condition these messages have traversed 2 or more sending gateways • the receiving fund has allocated monies from these employers to a relevant members’ account within 3 days of receipt • It is anticipated many funds will be able to complete the accelerated induction process within the first 3 to 5 days of the period • some with lower or sporadic volumes will take longer.

7. Wave 2 – Accelerated Induction Process • Receiving funds in accelerated induction: • 89 receiving funds • 276 USIs • Sending sources in accelerated induction: • three or four clearing houses (ADP likely to join late November) • key payroll houses: Attache, Sage Micropay, Frontier, MYOB, Landmark • many thousands of employers and growing progressively with onboarding activity of funds and intermediaries • Contribution messages and payments arriving from 3 November: • overall volumes likely to be in the 5-10,000 contributions p.w. range • smaller funds may experience daily volumes in the 0-50 range • larger funds may experience volumes in the many hundreds range • large administrators may experience volumes in the thousands.

8. Wave 2 – Accelerated Induction Process • What does a new candidate need to do to prepare for induction? • Review the induction checklist: www.softwaredevelopers.ato.gov.au • Undertake a business readiness check, including production state readiness • Have a contingency plan in place • Nominate a contact person • What do I need to do once induction starts? • Ensure you are ready to go on 3 November • Process your first SuperStream contributions! • Deal with any issues/errors • Remediate any systems or process issues (based on business priorities) • APRA funds to reconcile transactions processed against those received daily from the gateway • APRA funds to complete the reporting template and send to ATO Nerve Centre (for at least two days of received transactions)

9. Wave 2 – Accelerated Induction Process • Obtaining cross-certification • APRA funds • Funds must complete the transaction reporting template for their nominated USIs and return same to the ATO showing contributions for two separate processing days • On receipt of the completed reporting template, the ATO will follow-up any issues and confirm cross certification via email • New employer solutions • For new employer side solutions, we would expect to maintain induction similar to Wave 1, in that: • A small group would be quarantined in the first instance • 4 cycles to be completed (either 2 cycles by 2 employers or 1 cycle by 4 employers spread over 4 weeks) • Continue with reporting and nerve centres conferences similar to Wave 1.

10. Wave 2 – Accelerated Induction Process • What if something goes wrong • Document and anticipate – in advance – likely failure points or processing issues • Follow a structured issue resolution process during induction: • Good diagnosis must precede any response • Understand in advance who is in your ‘value chain’ • Engage relevant service partners in issues resolution • Communicate with sender (phone, email, face to face) • Remediate any problems at source – engage with relevant service providers in issue resolution • Report any major unresolved issues to your relationship manager • What if a problem continues and prevents contribution processing being finalised? • Your contingency plan should address this! • Possibilities include freeze, rollback and/or switch to manual process (there may be others) • The ATO will continue to run Nerve Centre meetings to deal with any escalated issues • Daily updates to be published on the web

11. Wave 3 - Induction for funds with alternative dates and new employer side solutions • Wave 3 will start in February 2015 – running through to June 2015 • A similar process to accelerated induction will re-commence in February 2015 • ATO will brief funds who have nominated an alternative date 3-4 weeks prior to their start date to discuss their induction and confirm arrangements and readiness preparation • For new employer side solutions, we would expect to maintain induction within a small quarantined group in the first instance • until at least 4 cycles are completed (either 2 cycles by 2 employers or 1 cycle by 4 employers) • Progressively move to a more risk-based approach as experience builds • Continue to operate industry nerve centre, but review role as time progresses.