With employers required to be Super Stream compliant, a variety of Superannuation Clearing Houses are available to pay superannuation contributions for employees to their employees’ respective superannuation funds.
Clearing house services are available either within the software provider (e.g. Xero, MYOB and Quickbooks), through Superannuation Funds directly or by using the ATO’s Small Business Superannuation Clearing House (SBSCH).
With many businesses looking to claim a deduction in the 2020 tax year for the June quarter’s contributions, the timing of the payments is critical!
The contributions must be received by the superannuation fund and not just the clearing house before 30 June 2020. If the clearing house does not transfer the contributions to the superannuation fund until after 30 June 2020, the deduction will not be available until next year.
Furthermore, if the superannuation fund does not receive the contributions by 28 July 2020 (being 28 days following the end of the quarter) no deduction will be available at all.
Employers therefore need to take into account the processing time of the clearing house they use.
The time it takes for a superannuation contribution to be received by a fund after being paid by the employer to the clearing house may vary.
Current information from the websites of some popular providers regarding when contributions should be paid in order to be received before year end and allow the business to claim a deduction are as follows;
To ensure that the funds receive your payments in time, you should submit the super payments in your MYOB software at least 4 business days before they are due.
In our experience contributions have often taken longer than 4 business days, so we suggest ensuring payments are processed by at least 23 June 2020.
Payments need to be accepted by the SBSCH by 23 June 2020. Given payments can take a few days to be received by the SHSCH we suggest allowing an additionally 2 – 3 business days for EFT and BPAY.
To ensure your contributions reach the superannuation funds by 30 June 2020, your Auto Super batch must be “Approved” by 24 June 2020.
Further, if you wish to be conservative, we suggest you allow an extra 2 business days to the above timelines.
Please note that the above payment dates may mean that the final pay run in June may not be taken up as part of the June quarter’s superannuation paid before year end. Where this is the case, the balance of superannuation for the June quarter will still be required to be received by the superannuation fund within 28 days following the quarter end. However the balance will not be deductible until the 2021 tax year.
Single Touch Payroll
Many businesses are now approaching their first financial year end using single touch payroll (STP). Single touch payroll will streamline the way which employees provide both employees and the ATO with End of Financial Year (EOFY) payroll information, now called Income Statements.
The EOFY finalisation declarations process has different due dates depending on the number of employees a business has. The table below outlines the date the finalisations must be made by:
20 or more
14 July 2020
19 or fewer
31 July 2020
This process needs to be completed through your STP compliant software. As an employer, you will also need to inform your employees that they will no longer receive a payment summary from you. Instead, employees will be able to access their Income Statement through their registered tax agent or through MyGov. The ATO has provided a factsheet for employers to provide to their employees to help them understand this change. Please CLICK HERE for a copy of the factsheet.
Please check the information carefully before completing the finalisation declaration. Any corrections to the information submitted need to be made through your STP compliant software.
For payments to employees that were not reported through STP, employers are still required to:
- Provide a payment summary to their employees; and
- Provide the ATO with a payment summary annual report for these payment summaries.
These payment summaries must be provided to the employees by 14 July 2020.
Employers who previously held an exemption as closely held employers will need to be single touch payroll compliant from 1 July 2020.
Where you require assistance with setting up single touch payroll or any other information detailed above, please contact your Hall Chadwick adviser.
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