When going electronic is actually slower!
It has been approximately 3 years since employers have had to become “Super Stream” compliant. That is, all employer super contributions must now be reported and paid electronically. The ATO, most of the larger super funds and also the bookkeeping software providers like MYOB or Xero utilise a clearing house facility that collects these super contributions before disbursing them to the respective employee member accounts.
The major criticism of all this electronification has been just how slow the clearing houses are at processing your employee’s super. Whilst we are a big fan of the time savings that can be achieved through adopting technology, one observation is that all this technology has made the process from the time you pay your employee’s super to when it arrives in their fund slower, not faster.
A major concern for employers is making sure they make their super contributions on time and don’t inadvertently have a late payment.
There are serious implications for an employer who pays super late including penalties, interest and the fact that late super payments are not tax deductible to the business. Importantly, the ATO consider that even if an employer remitted their super before the due-date to a clearing house, the super is not considered as being paid until it hits the employee’s fund. Despite the ATO’s legislated cut-off dates, all clearing houses have imposed their own cut-off dates which are often as early as 10 days before the official ATO due date. This has made it unreasonably complex for employers with two different due dates that they need to comply with for the same payment.
Even more confusing, and in our opinion disappointing, is that there is a different set of rules for employers who use the Government’s Small Business Super Clearing House as it is the only clearing house where the super is treated as having been paid to the employee’s fund at the date the clearing house receives your payment. We are calling on the Government to simplify this system and ensure that all clearing houses are treated the same. Any other system will make it unnecessarily complex for employers to comply with. Watch this space!