SFSS - Small Business Superannuation Clearing House - definition & overview

The Small Business Superannuation Clearing House (SBSC) is a free service provided by the Australian Government to assist small businesses in meeting their superannuation obligations. This service is designed to reduce the administrative burden associated with superannuation payments, thereby allowing small business owners to focus on the core aspects of their business.

Superannuation, or 'super', as it is commonly known in Australia, is a compulsory system of placing a portion of an employee's income into a fund to support their financial needs in retirement. The SBSC acts as an intermediary, facilitating the process of making super contributions on behalf of employees to their chosen super funds.

Eligibility for SBSC

To be eligible for the SBSC, a business must be classified as a small business in Australia. This is generally defined as a business with 19 or fewer employees, or an annual aggregated turnover of less than $10 million. The SBSC is not available to larger businesses or those with a higher annual turnover.

It's important to note that the number of employees includes full-time, part-time, and casual employees who are entitled to super. Contractors may also be considered employees for super purposes if they are paid wholly or principally for their labour.

Registration Process

To use the SBSC, businesses must first register with the Australian Taxation Office (ATO). The registration process involves providing business details, including Australian Business Number (ABN), and details about each employee for whom super contributions will be made.

Once registered, businesses can start using the SBSC to make super contributions. The SBSC allows businesses to make a single electronic payment to the clearing house, which is then distributed to each employee's nominated super fund.

Benefits of Using SBSC

The SBSC offers several benefits to small businesses. Firstly, it simplifies the super payment process by allowing businesses to make a single payment to multiple super funds. This can save significant time and reduce administrative costs.

Secondly, the SBSC provides a record of all super payments made, which can be useful for auditing and record-keeping purposes. Lastly, by using the SBSC, businesses can ensure they are meeting their super obligations, thereby avoiding potential penalties and charges.

Superannuation Obligations for Small Businesses

In Australia, employers have a legal obligation to make super contributions for their employees. As of the current financial year, employers must contribute 9.5% of an employee's ordinary time earnings to a super fund. This is known as the Superannuation Guarantee (SG).

Employers must make these contributions at least four times a year, by the quarterly due dates. If employers fail to meet these obligations, they may have to pay the Superannuation Guarantee Charge (SGC), which includes the SG shortfall amounts, interest on those amounts, and an administration fee.

Choosing a Super Fund

Most employees have the right to choose the super fund to which their super contributions are made. Employers must provide a Standard Choice Form to new employees within 28 days of their start date, allowing them to nominate their chosen super fund.

If an employee does not choose a super fund, employers must make contributions to a default super fund, often referred to as a 'MySuper' product. Employers should ensure the chosen fund is a complying fund, that is, it meets specific requirements and obligations under Australian super law.

Record Keeping

Employers must keep records that show they have met their super obligations. These records include the amount of super paid for each employee, the dates payments were made, and that a choice of super fund was offered to employees. These records must be kept for five years.

Using the SBSC can simplify this record-keeping process, as the service provides a record of all super payments made. This can be particularly beneficial for small businesses, where resources for administrative tasks may be limited.

Conclusion

The Small Business Superannuation Clearing House is a valuable tool for small businesses in Australia. By simplifying the super payment process and providing a record of payments made, the SBSC can save businesses time and resources, allowing them to focus on their core operations.

By understanding and utilising the SBSC, small businesses can ensure they are meeting their super obligations, thereby supporting the financial wellbeing of their employees and avoiding potential penalties. As such, the SBSC is an essential part of the small business landscape in Australia.