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 business owners. This is where a super clearing house service is invaluable. What do you, as a small business owner, need to know about choosing a clearing house to ensure you are compliant?

1) Why use a superannuation clearing house?

The superannuation guarantee requires businesses to make payments at least four times a year. A super clearing house facilitates these payments. Through a super 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 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, itFpay can save you time and prevent any administrative errors.

Once you have registered the payment details of your employees with a clearing house, it’s 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.

While most super funds will offer a superannuation clearing house service, not all clearing houses are the same.  It’s always good to understand the services provided is helping you meet your employer obligations.

2) Who runs it?

There are three types of companies running clearing houses. Most super 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, hence there are third-party companies that will offer this 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) Is it 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.

Source:  Image by Beam from Reckon Conference 2023.  Diagram shows a decade off continuous change for Australian businesses navigating the superannuation landscape. Beam is issued by Precision Administration Services Pty Ltd.

4) Small businesses can access the ATO’s clearing house

With every employee able to select their own super 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.

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

For small businesses looking for a simple cost-effective clearing house solution, the ATO’s Small Business Superannuation Clearing House is one option, it does however come with limitations around integrations and having a full scope payroll solution..

However, if a business is looking for an integrated all in one solution from payroll to paying super in one place then a payroll software solution can be a superior option to consider.

5) Not all clearing houses are made equal

As with any service, not every clearing house provides the same features for their customers. It’s 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 super 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 inquiries.