Processing time frames with clearing houses ‘catching out’ clients
With contributions taking up to 10 days to reach a super fund when processed through a superannuation clearing house, clients may want to look for alternative ways of getting those contributions to the fund, warns a big four accounting firm.
Deloitte Private partner Liz Westover said it’s very important that employers allow up to 10 days when using clearing houses to make contributions to a super fund.
Given how late in June it is now, if clients have previously relied on those clearing houses, they might want to find another method of getting those contributions into the super fund.
“I always warn people about the use of clearing houses. They can be very useful for processing or distributing monies, it’s one payment and they disseminate all the information and monies to the super fund, but the fine print states that it can take up to 10 days to actually process those contributions,” Ms Westover said at the Chartered Accountants Australia and New Zealand SMSF Day 2019 Workshop.
“I have seen people getting caught out by this one. They think that their SG obligations are met on payment to the clearing house; it’s not. Your obligation for SG is met when the money hits the super fund.
“So, if you’re relying on clearing houses, make sure you’re allowing for these 10 days. If you’re talking about the 28th day after the end of the quarter, you’ll actually need to meet those obligations by the 18th to make sure you’re meeting those obligations.”
The only exception to this, she said, is the ATO’s small business superannuation clearing house.
“Your SG obligations are met on payment to that clearing house, but only that particular clearing house,” she noted.
In the lead-up to the end of the financial year, Ms Westover said it is also important for SMSF members to confirm their employer contributions if they’re thinking of making personal super contributions so that they don’t inadvertently breach their concessional contributions cap.
“The real catch is that if you’ve got an employer who needs another tax deduction. So, I’ve seen situations where they will bring forward the contribution that they would normally make in July and they bring it forward to June so that they get the additional tax deduction in June; that will impact on people’s ability to make personal contributions,” Ms Westover explained.
“In previous years, it probably didn’t matter so much because most people were ineligible to make personal super contributions due to the old 10 per cent rule, but now that they can, you need to be a little bit more alert to how those employer contributions are going in and what cap space you actually have for personal contributions.”
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.