If you've recently started using Payday Super and suddenly your entire super batch has been rejected in Xero, you're not alone.
We're seeing an increasing number of employers run into the same problem, and in many cases, it comes down to one employee's Self-Managed Super Fund (SMSF).
The frustrating part? One SMSF with an issue can stop everyone's super from being processed.
What's an ESA?
An Electronic Service Address (ESA) is simply the digital address an SMSF uses to receive SuperStream contribution information.
Think of it like a mailing address for super contributions. It isn't an email address or bank account. It's the electronic destination that allows contribution data to reach the SMSF.
If the ESA isn't working, the super contribution can't be delivered.
Why Is This Happening Now?
Before Payday Super, employers generally submitted super once each quarter.
Now that super is being paid every payday, these issues are being picked up much sooner and much more often.
Unfortunately, Xero currently rejects the entire batch if one SMSF can't accept its contribution.
The Four Most Common Reasons
We've found most of these issues fall into one of four categories.
1. The SMSF Doesn't Have a Registered ESA
Sometimes the fund simply doesn't have an ESA registered yet. Without one, SuperStream has nowhere to send the contribution information.
2. The ESA Can't Be Registered
In some cases, the SMSF has outstanding compliance obligations (such as overdue annual lodgements), which prevents an ESA from being registered until those issues are resolved.
3. The ESA Doesn't Match ATO Records
Occasionally the information held by the ESA provider doesn't match what's recorded with the ATO. When that happens, SuperStream can't validate the fund correctly and the contribution fails.
4. The ESA Registration Has Failed
Sometimes it's simply a technical issue. The ESA registration may have failed due to a system or provider error and just needs to be submitted again.
So... What Do You Do?
The fix usually isn't something the employer can do themselves.
Instead, the employee will need to contact the accountant or administrator who looks after their SMSF and ask them to investigate the ESA.
Depending on the cause, the issue might be resolved in a few minutes, or it could take weeks or even months if there are compliance matters that need attention.
What Should Employers Do in the Meantime?
Don't let one SMSF hold up everyone's super.
Until the issue has been fixed:
- Untick the affected SMSF (and any employees attached to that fund) from your Xero super batch.
- Process the remaining employees as normal.
- Keep trying the affected SMSF once you've been advised the issue has been resolved.
A handy tip: sort your Xero super batch by Fund. This groups employees with the same super fund together and makes it much easier to identify which fund needs to be excluded.
Don't Forget to Contact Your Employee
As soon as you know which SMSF is causing the problem, let the employee know.
We recommend contacting them by both phone and email so there's a clear record that you've advised them of the issue and asked them to have their SMSF investigated.
How We're Helping
For SMSFs managed by illumin8, we've already identified a number of funds that may be affected.
Over the coming days we'll be contacting those clients directly with information about their specific situation and what needs to be done to get their ESA working correctly.
If you're unsure why your super batch is failing or need help identifying the affected fund, get in touch with our team. We're happy to help.
Resource: Sample Employee Letter
Below is a sample of a letter you can send to your employees who are having issues with their super fund.
Employee Notification – Action Required for Your Self-Managed Super Fund (SMSF)
Dear {{Employee Name}},
We are writing to let you know that we have been unable to process your recent superannuation contribution because there is an issue with your Self-Managed Super Fund's (SMSF) Electronic Service Address (ESA).
Under the Australian Government's Payday Super requirements, employers are required to submit superannuation contributions each pay cycle using the SuperStream system. Your SMSF's ESA is a unique electronic address that allows SuperStream contribution information to be delivered to your fund.
At present, your fund's ESA is preventing your super contribution from being processed successfully. Because of the way batch payments are processed through Xero, this issue can also prevent super contributions for other employees in the same payment batch from being submitted.
To ensure super contributions for other employees are not delayed, we will temporarily exclude your SMSF from our batch payment until the issue has been resolved. Once your SMSF is able to receive SuperStream contributions again, we will arrange payment of any outstanding superannuation owed to your fund.
What You Need to Do
Please contact the accountant, administrator or adviser responsible for managing your SMSF as soon as possible and ask them to investigate why your fund's Electronic Service Address (ESA) is not working.
The issue may relate to one of the following:
- No Electronic Service Address (ESA) is currently registered.
- The ESA cannot be registered due to outstanding SMSF compliance obligations.
- There is a mismatch between the ESA information and Australian Taxation Office (ATO) records.
- The ESA registration has failed and needs to be resubmitted.
Your SMSF administrator will be able to determine the cause and arrange the appropriate correction.
Once the Issue Has Been Resolved
Please notify us once your SMSF administrator confirms that the ESA issue has been corrected. We will then process any outstanding superannuation contributions to your fund as soon as possible.
If you have any questions about this notification, please contact us.
Thank you for your prompt attention to this matter.
{{Employer Name}}
{{Position}}
{{Company Name}}
{{Phone}}
{{Email}}
