The purpose of a superannuation clearing house
Employer superannuation contributions totalled $33.5 billion for the March 2024 quarter alone. This statistic highlights the colossal scale of superannuation in Australia and reinforces why many businesses rely on a superannuation clearing house to assist with the process.
In this article, we explain what a superannuation clearing house is and why businesses use one. We’ll also answer some frequently asked questions about super clearing houses, and explain how Rippling can further simplify the superannuation process.
All information contained in this article is accurate as of 10.10.2024. For the most up-to-date information, please refer to the Australian Taxation Office.
What is a superannuation clearing house?
A superannuation clearing house is an online system that simplifies the process of distributing Super Guarantee (SG) contributions. Instead of manually paying all your super contributions to multiple super funds for different employees, a super clearing house allows you to submit your super data and payments in one go. The clearing house then handles the distribution of these contributions to the nominated super funds of all your employees.
The core function of a superannuation clearing house service is to act as an intermediary. You upload the relevant payment and fund details, and the clearing house consolidates the information and disburses the funds to the appropriate super accounts.
Examples of popular clearing houses include SuperChoice and the Small Business Superannuation Clearing House (SBSCH). SuperChoice is a popular option for businesses of various sizes, while the SBSCH is a free service the Australian Taxation Office (ATO) offers for small businesses with fewer than 20 employees or an annual turnover of less than $10 million.
Why use a superannuation clearing house?
Using a superannuation clearing house offers several key benefits that can significantly streamline superannuation management for your business. You can explore the primary advantages below:
- Efficiency: A superannuation clearing house saves time by eliminating the need to make multiple payments to different super funds. Instead of processing payments individually for each employee’s super fund, you can submit all contributions in a single online payment, and the clearing house takes care of distributing them to the respective funds.
- Accuracy and compliance: A clearing house service helps ensure you meet your SG obligations by processing payments on time and reducing the risk of errors that could lead to non-compliance. This is especially valuable if you’re a larger business managing contributions to multiple super funds, where the complexity of handling various accounts and the risk associated with inaccuracy and, therefore, non-compliance can otherwise become overwhelming.
- Cost-effectiveness: By automating and consolidating payments, a superannuation clearing house reduces the chances of late payments, which can attract penalties. If you’re a small business using the SBSCH, the service is also free, making it a cost-effective way to manage superannuation contributions while avoiding unnecessary fees.
Superannuation clearing house FAQs
Do employers have to pay super through a clearing house?
There's no legal requirement for an employer to use a superannuation clearing house to pay super. However, all businesses must comply with SuperStream, the ATO-mandated system for paying super contributions electronically in a standardised format. Using a superannuation clearing house is one of the most common ways to meet SuperStream requirements.
How long does it take for super to go through a clearing house?
Typically, superannuation payments processed through a clearing house can take up to seven business days to be distributed to the respective superannuation funds. However, this timeframe can vary depending on the clearing house and the funds involved. It's a good idea for employers to process payments well before the quarterly due dates to ensure timely contributions.
How do I find a superannuation clearing house?
To find a superannuation clearing house, you can explore the following options:
- ATO's Small Business Superannuation Clearing House: If you have fewer employees than 20 or a turnover of less than $10 million, you can use the SBSCH for free. You can register and access this service directly through the ATO online services or business portal.
- Through your payroll software: Many payroll systems, such as Xero, MYOB, or QuickBooks, offer integrated SuperStream-compliant clearing house services. Check your current payroll software to see if it includes superannuation processing.
- Super fund providers: Some large superannuation funds provide access to clearing houses. For example, popular funds like AustralianSuper and REST offer services to help employers meet their superannuation obligations.
- Third-party providers: You can also find independent clearing houses like SuperChoice or QuickSuper, which larger businesses or those with more complex superannuation requirements commonly use.
Is the use of a super clearing house best for businesses of a certain size or revenue?
Any business, regardless of size or revenue, can benefit from using a superannuation clearing house. For small businesses with fewer employees or lower revenue, clearing houses like the ATO’s free SBSCH can significantly reduce administrative tasks and ensure compliance, which is helpful when managing limited resources.
For large businesses with higher revenue and more employees, a clearing house helps streamline the process of managing super contributions to multiple funds, ensuring accuracy, timely payments, and compliance with SuperStream regulations. There are no employee or revenue thresholds that limit the use of a clearing house, making it a valuable tool for businesses of any size looking to simplify super management.
Simplify the superannuation process with Rippling
Managing superannuation contributions can be a complex and time-consuming task, particularly for businesses needing to contribute sizable sums to various super funds. A superannuation clearing house simplifies this process by consolidating payments and distributing them to the appropriate funds.
Rippling takes this efficiency one step further by fully automating super contributions, calculating and submitting them directly to a clearing house (SuperChoice) with each payroll cycle. This seamless integration ensures you meet your Superannuation Guarantee obligations on time and without errors, reducing the risk of penalties.
By using Rippling, you can simplify superannuation management, streamline compliance, and focus on more strategic tasks.
Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.
