Superannuation
Super clearing house
A super clearing house is a service that lets an employer make one payment and have it split and sent to each employee's chosen super fund with the correct data.
A super clearing house is a service that receives a single payment from an employer, together with the details of each employee's super contributions, and then distributes the correct amounts to each employee's chosen super fund. This simplifies the task for employers who have staff in many different funds, since the employer does not need to make separate payments with the correct reference details to each fund.
There are commercial clearing houses, and many payroll and accounting software products have built-in clearing capability. The ATO also operates the Small Business Superannuation Clearing House, a free service available to eligible small businesses. Eligibility rules relate to the size of the business, so employers should check on ato.gov.au to see whether they qualify. The service is accessed through ATO online services.
An important rule concerns timing. When an employer uses a clearing house, the contribution is generally treated as paid when the clearing house passes it to the fund, not when the employer pays the clearing house. The exception is the ATO's own small business service, where payment is treated as made when the clearing house receives the money. This difference matters for tax deductions and for avoiding the super guarantee charge. Employers should therefore know which kind of clearing house they use and allow enough time.
Clearing houses also help with data. Funds need accurate information about the employee, the period and the type of contribution so they can allocate it properly. The clearing house standardises the data and uses the standard messaging format required by funds. This reduces the risk of rejected or delayed contributions, which can otherwise cause problems with compliance and lost member earnings.
GST can apply to fees charged by some commercial clearing houses. If the employer is registered for GST, they can claim credits for the GST in the fee on receipt of a valid tax invoice, in the usual way. The contributions themselves are not subject to GST. Payroll reporting through Single Touch Payroll should include super liability details, so the ATO can see what the employer owes and has paid.
A common misunderstanding is that using a clearing house automatically means the employer has met the deadline. It only does so if the contribution actually reaches the fund in time, or in the special small business case, when it reaches the clearing house in time. Another mistake is to forget to check that employees' details are up to date, which can delay payments.
This is general information only, so confirm the rules for your business with the ATO or a registered tax professional.
Worked example
A cafe has eight employees with super in six different funds. The quarterly SG totals $9,200. Instead of making six separate payments, the owner uploads the payroll data to a commercial clearing house and pays $9,200 plus a fee of $22 plus $2.20 GST. The clearing house sends each fund its share. The owner claims the $2.20 credit on the BAS and diarises the date by which funds must receive the money.
Practical tips
- Find out whether your clearing house treats payment as made on receipt or on delivery to the fund, and plan your timing accordingly.
- Keep records of every contribution and the clearing house confirmation, since you may need them to show you paid on time.
- Check eligibility for the ATO small business clearing house if you want a free option.