ATO super warning for 200,000 Aussies ahead of looming deadline: 'On the hook for penalties'

Yahoo

11 hours ago

Small businesses have been warned to start making arrangements ahead of a popular superannuation system closing down by mid-next year. The Small Business Superannuation Clearing House (SBSCH) is used by roughly 200,000 Australians to pay and process their workers' super entitlements.
But it will be shut down by July 1, 2026 with the introduction of Payday Super. Business owners not on the SBSCH have until October 1 this year before sign-ups are permanently closed, and the Australian Taxation Office (ATO) said all users need to get their affairs in order.
"Existing users are encouraged to take steps now to transition to alternative options," it said.
"These include reviewing your existing software and payroll packages, which may already include super functions, or looking at options offered by super funds, commercial clearing houses, or other payroll software or providers."
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What is the Small Business Superannuation Clearing House?
The SBSCH is available to small businesses with 19 or fewer employees that have an annual turnover of less than $10 million.
It's a free service from the ATO that ensures all compulsory super contributions meet government standards and are paid on time.
Instead of firing off each individual payment for each employee, the SBSCH lets business owners complete the task in a single payment, which helps them save potentially hours throughout the year.
At the moment, owners are required to pay super to staff-nominated accounts once a quarter.
The SBSCH also provides a full history of superannuation payments in case an employee or owner needed to check it.Why is it shutting down?
Payday Super is set to be brought in at the start of the next financial year, which will see workers paid their superannuation every time they receive their wage, instead of once a quarter.
The policy, which hasn't yet been mandated, is aimed at cutting down on unpaid super, with $5.2 billion failing to be transferred properly to workers in 2021-22, according to the ATO.
As a result, the SBSCH will be redundant under the new system, as it will be much harder for the SBSCH to pool all payments into one transaction that will become much more frequent.
These compulsory superannuation payments will have to be moved into payroll software, commercial clearing houses, or services offered by super funds, which further causes the SBSCH to become obsolete.
Payday Super is expected to kick in on July 1 next year, and the SBSCH's final day is set to be June 30.
Concerns erupt as SBSCH enters twilight era
Tony Greco, senior tax advisor at the Institute of Public Accountants, is worried about the burden that will be placed on small business owners once the SBSCH is sunsetted.
'The Small Business Clearing House is a no-cost option for many small businesses that offers one very important additional benefit," he said.
"Only the SBSCH offers protection from substantial SG penalties if there are any delays in the money dropping into the employees' nominated superannuation account."
'If employers use any other commercial clearing house, they are on the hook for penalties if there are any hiccups in administration between the clearing account and the money received in the employee's super account."
He explained that business owners end up being fined for delayed or missed super payments even when they're the result of factors outside of their control.
There could be a major system outage at a commercial clearing house, but the buck would stop at the business owner.
Greco called for the ATO to ensure small businesses receive adequate help in transitioning to a new system well before the June 30 deadline to ensure owners aren't affected by the change.