By Dan Barrett

Small Business Superannuation Clearing House

Businesses

While every employer is required to make superannuation payments to their staff, the process of making those payments can be draining on the resources of the small business owner. This is where a superannuation clearing house service is invaluable. What do you, as a small business owner, need to know about choosing a superannuation clearing house to ensure you are compliant?

1) The Function of a Superannuation Clearing House?

The superannuation guarantee require small businesses to make payments at least four times a year. A super clearing house facilitates these payments. Through a superannuation clearing house, employers can make a single online payment for superannuation contributions that will be paid into employees’ super funds.

Some larger companies can deal with up to 50 different superannuation funds with every payment cycle. While larger companies have administration staff to deal with such variance, for most small business owners it can be lead to a crippling drain on resources especially if staff incomes vary each cycle due to shift loadings, commissions, salary sacrificing etc. By using a super clearing house, it can save you time and prevent any administrative errors.

Once you have registered the payment details of your employees with a clearing house, it is a simple matter just to login each payment cycle and make an EFT payment to the clearing house. The role of the clearing house then is to distribute the payments to all of the employee’s superannuation forms.

Most superannuation funds will offer a superannuation clearing house service. As such, there is little need to shop around for a service. Rather the company you have selected as your default superannuation provider will be able to assist you with clearing house services.

2) Who Runs it?

There are three types of companies running superannuation clearing houses. Most superannuation fund services will also provide a clearing house for you to process payments through as a value-add service. Several banks also provide super clearing house services. And then there are third-party companies that will offer the service. As with many other financial services, superannuation clearing houses are regulated by the Australian Prudential Regulation Authority (APRA). APRA is a government body which is funded wholly by the industries that it supervises.

3) It is Compulsory

Alongside the introduction of SuperStream, from 1 July 2014 any Australian company with 20 or more employees are required to make their super payments online through a clearing house. Your business will not need to make any changes to how information or payments are made to the clearing house as long as your chosen clearing house submits data and payments electronically in accordance with SuperStream.

Some additional data may need to be provided in the payroll file you send to your clearing house. This may include the fund’s unique superannuation identifier, bank account details, electronic service address, or the employee tax file number (TFN). The additional information is needed to correct data absences that exist in the current system, which often lead to problems like lost superannuation accounts, returned contributions, and delayed processing.

4) For Small Businesses With 19 Or Fewer Staff, It’s Free

With every employee able to select their own superannuation fund, it can be a resource drain on a small business. Submitting payments to so many different funds can be a time consuming exercise, which is why most companies employ a clearing house to facilitate payments. For a small business, however, the drain can be punishing.

To combat this, the government provides free access to The Small Business Superannuation Clearing House for any small businesses with 19 or fewer employees. Now every small business can meet their superannuation guarantee obligations and cut through burdensome red tape.

The Superannuation Clearing House is run by the Australian Taxation Office, having transferred from the Department of Human Services last year. The service simplifies the process with a single electronic payment for all employees, which sends the contributions to the nominated superannuation funds—no longer do small businesses need to deal with multiple funds.

Small business owners can register for the service online, managing the continued service through their online portal.

While using the service is optional, it has proven to be a popular service, with 15,000+ small business owners using the service.

Table 39: Small Business Superannuation Clearing House
2010–11 2011–12 2012–13 2013–14*
Employers registered 4,781 21,920 16,303 15,573
Employee payments made 96,600 542,651 1,107,964 1,083,523
Superannuation payments made $56.0 million $318.5 million $661.3 million $662.8 million

*The Clearing House was transferred to the Australian Taxation Office on 1 April 2014; accordingly data for 2013–14 is from 1 July 2013 until 31 March 2014. 

5) Not All Clearing Houses Are Born Equal

As with any service, not every clearing house provides the same features for their customers. It is important to ensure that any clearing house you employ to meet your superannuation guarantee obligations also meets ATO compliance. After all, the benefit of using a superannuation clearing house is to reduce the level of resources you need to invest into meeting your ATO obligations as you make your payments. So when choosing a clearing house, it’s important to ensure it handles those obligations, which include: getting money to the receiving fund by the 28th of the relevant legislated quarter, passing on an eligible employee’s tax file numbers, and meeting choice-of-fund obligations. With funds now SuperStream compliant, they should be meeting these obligations, but the onus is on you to ensure they’re being met.

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This guide does not constitute professional advice, please speak to your accountant or advisor for specific financial enquires.

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