Change to super guarantee contributions into SMSFs

Author: Emma Partenza, Manager, TAG Financial Services

A major update to the small business superannuation clearing house (SBSCH) was introduced on 15 March 2024 that potentially impacts businesses being able to make superannuation guarantee contributions into SMSFs.

The update

SMSFs must have their bank account registered with the ATO (where the fund has multiple accounts, 1 must be chosen) and this is the account that superannuation contributions must be paid into by the employer.

Upon receiving the contribution, the clearing house will perform a validation check against records of the SMSF with the ATO before the amounts are transferred through to the SMSF’s account for the respective member/(s).

The intention of this change is to ensure they are allocated correctly and to protect the security of the contributions made.

The validation involves checking the employee’s SMSF bank account details match their SMSF records. Should there be any mismatch (or no bank account details registered) it will result in an invalid error and the clearing house will not be able to accept payments made for an employee’s superannuation guarantee contribution.

This change has already impacted several clients who run small business and make contributions into their SMSF.

Who it affects

Only small businesses who utilise the small business superannuation clearing house to make superannuation guarantee contributions on behalf of employees who have a SMSF.

What action to take

With quarterly contributions due for payment at the end of the month, it would be prudent, before payments are made, to be proactive and take the following actions:

    • Employees to confirm SMSF bank account details with their employer.
    • Employees to contact their SMSF tax agent to confirm bank account details are registered with the ATO.
    • Where a SMSF has multiple bank accounts, ensure to nominate one account that is registered for contributions to be made.
    • Update details where relevant with the ATO and employer.

How do we confirm / update the ATO records

Please contact your SMSF tax agent who has direct access with the ATO and can confirm the account registered and can make updates in a few minutes.

Tax agents need to ensure the bank account is registered against the Superannuation Role. There are 3 roles: income tax, activity statement and superannuation.

ATO confirming updates to trustees

As with any changes made to a SMSF with the ATO, the ATO will continue to issue alerts to trustees (via SMS or email) notifying a change has been made to the superannuation fund.

What happens if an invalid error occurs

After checking and updating either the employer’s system or the ATO records of the SMSF, the payment can be processed again.

Process as per ATO

You can still submit a SBSCH payment instruction for employees who have valid super fund details. Remove all payment amounts you’ve entered for employees with an invalid super fund bank details error. Make sure your payment matches the new ‘Total to Pay’ amount.

Once the employee’s fund bank account matches what’s listed on the SMSF record you can submit a SBSCH payment instruction for that employee.

As we approach 30 June this process becomes more important – as a reminder the SMSF can only bring to account a contribution on receipt – so even if the employer pays, if it has not cleared into the SMSF bank account prior to 30 June then it cannot be included against the member’s 2024 contribution caps.

What should you do now?

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Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686). Copyright 2024. Please do not reproduce without the expressed written consent of the author.