Small Business Super Clearing House changes

Changes made to the data integrity standards of the Small Business Super Clearing House may have an impact on certain individuals’ ability to make contributions.

As of March 15, 2024, the Small Business Super Clearing House (SBSCH) implemented changes aimed at enhancing data security and safeguarding the integrity of the superannuation system.

While these changes are undoubtedly a step in the right direction, they could pose challenges for individuals whose super funds do not align seamlessly with the ATO’s framework.

Before delving into the specifics, let’s provide some context.

What is the Small Business Super Clearing House?

Super clearing houses serve as convenient hubs that assist employers in meeting their superannuation payment obligations.

Instead of employers having to make multiple payments to various funds, clearing houses enable them to submit a single payment for the total superannuation owed, accompanied by a data file specifying where the contributions should be directed. The clearing house then handles the administrative burden of making individual payments.

The SBSCH, managed and established by the ATO, is a dedicated superannuation clearing house catering exclusively to small businesses. For the SBSCH, a small business is defined as one with 19 or fewer employees or an annual turnover of less than $10 million.

What changes are occurring with the SBSCH?

Starting from March 15, 2024, any payments processed through the SBSCH will undergo a cross-referencing procedure between the bank account details associated with the contribution and the bank account details of the SMSF registered with the ATO.

The ATO allows separate bank accounts to be recorded for the following purposes:

1. Income tax
2. Activity statements
3. General business

Only the bank account designated for general business matters is relevant in the context of SBSCH data matching.

If the bank account details do not match or have not been provided, the employer will encounter an “Invalid super fund bank details” error, and the SBSCH will be unable to facilitate payments to the SMSF.

Will this have an impact on me?

For the majority of individuals, the answer is likely no.

Most people either already have their fund’s bank account details recorded with the ATO, or their employers do not utilise the SBSCH (as it is exclusively for small businesses).

However, if your employer receives the “Invalid super fund bank details” error, then this is the first place you should check.

Who will be affected?

Clearly, individuals who have not recorded their fund’s bank account details or have different bank account details will be affected.

Fortunately, for the majority of these cases, rectifying the situation is a straightforward matter of updating the fund’s bank account details with the ATO. In most instances, this can be swiftly resolved, by advising us that your employer received the error message.

The situation becomes more complex for funds that employ different bank accounts for specific reasons, such as:

1. Funds utilising a bank account other than their primary one to receive contributions
2. Funds constrained by restrictions preventing the use of their primary bank account or the contribution receiving account.
3. Funds where contributions for different members are directed to separate accounts.

For some of these funds, the solution remains the same as for everyone else: update the bank details with the ATO to reflect the bank account used for contributions, or change the account used for contributions to one already recorded with the ATO.

While the ability to record different bank accounts for different transaction types should alleviate many of these issues, it will not resolve all of them.

Regrettably, for funds that cannot resolve the problem through this means, there is currently no solution other than changing the account to which contributions are made.

Overall, this change represents a positive measure. In today’s society, any actions taken to enhance data integrity and security are commendable. It is unfortunate, however, that the process of bolstering security in our digital world often necessitates some limitations on the flexibility to which we have become accustomed.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.