Big changes in little contributions

Changes to the Small Business Super Clearing House data integrity standards may impact the ability of some people to make contributions.

Effective from 15 March 2024 the ATO’s Small Business Super Clearing House (SBSCH) has implemented changes to bolster its data security and help protect the integrity of the superannuation system.

These changes are certainly a positive step however, they may create some issues for people whose super fund doesn’t fit nicely within the ATO’s framework.

But first, some context.

What is the Small Business Super Clearing House?

Super clearing houses, generally, are “one-stop” shops that help employers facilitate their superannuation payment requirements.

Rather than an employer having to complete multiple payments to multiple funds the clearing houses allow employers to send one payment for the totality of super payable, along with a data file about where the contributions are going, to a clearing house who will then take care of the administrative burden of making the individual payments.

The SBSCH is a specific superannuation clearing house established and managed by the ATO that caters exclusively to small businesses. For the purposes of the SBSCH a small business is one that has 19 or fewer employees or annual turnover of less than $10M.

What’s changing with the SBSCH?

From 15 March 2024 any payments made through the SBSCH will cross reference the bank account details attached to the contribution with the bank account details of the SMSF recorded with the ATO.

The ATO allows you to record a separate bank account for each of:

• Income tax,
• Activity statements, and
• General business

It is only the last of these accounts that is relevant for the purposes of the SBSCH data matching.

If the bank account details do not match (or haven’t been supplied) then the employer will receive an “Invalid super fund bank details” error and the SBSCH will not be able to facilitate payments to the SMSF.

For those of you who have used the Superstream system for rollovers this process may look similar. That’s because this is functionally the same process that is used for validating bank details for Superstream rollovers.

Will this impact me?

For the vast majority of people the simple answer is no!

Most people will either already have their fund bank details recorded with the ATO OR their employer won’t use the SBSCH (remember it’s only for small businesses).

That said, it’s still a good idea to check with both the employer and the fund’s tax agent to ensure the bank account being used for contributions is the same bank account that the fund has listed with the ATO.

Who will be impacted?

Obviously, those people who either don’t have their fund’s bank account details recorded OR have different bank account details recorded will be impacted.

Luckily, for the majority of these cases, it will be a simple matter of updating the fund’s bank account details with the ATO and they’re all sorted. There may be some initial consternation as this gets actioned but, in most cases, it will be a quick fix.

Where it gets more problematic is those funds who use different bank accounts for a specific reason, for example:

• Funds who use a bank account other than their “main” bank account to receive contributions
• Funds who use bank accounts that have restrictions that prevent them from being used as either the primary bank account or the account for receiving contributions
• Funds where the contributions for different members go into different accounts

For some of these funds the answer will be the same as for everyone else. Just update the bank details with the ATO to the bank account being used for contributions (or change the account being used for contributions to one recorded with the ATO).

The functionality to record different bank accounts for different transaction types SHOULD eliminate a lot of these problems, but it won’t eliminate all of them.

Unfortunately, for the funds where this doesn’t solve the problem there is (at present) no solution other than changing the account to which the contributions are made.

Largely, this change is a positive measure. In the society we live in today any measures to increases data integrity and security are positives. It’s just unfortunate that the process of making our digital world more secure often times means limiting some of the flexibility we’ve grown accustomed to.