The Small Business Superannuation Clearing House (‘SBSCH’) is a free service that employers can use to make superannuation guarantee (‘SG’) contributions. Eligible employers can pay their SG contributions as a single electronic payment to the SBSCH, and the clearing house will then distribute the relevant payments to each employee’s superannuation fund.
The major benefits for employers that use the SBSCH include streamlining compliance with their SG and ‘SuperStream’ obligations. However, from a timing perspective, deductibility concerns arise for employers. This is primarily due to the timeframe between when an employer makes a payment to the SBSCH and when the SBSCH forwards contributions to the employees’ superannuation funds.
In November 2019, the ATO released draft Practical Compliance Guideline (‘PCG’) 2019/D8 to communicate its practical administrative approach for employers wishing to claim a deduction for payments made to the SBSCH.
Importance of identifying the timing of a superannuation contribution
In Taxation Ruling (‘TR’) 2010/1, the ATO provides its views on ‘what is’ a superannuation contribution (i.e., how a contribution can be made to a superannuation fund), as well as ‘when’ a contribution is taken to be made to a fund (i.e., the timing of the contribution).
These concepts are particularly significant for the following key reasons:
- Claiming a tax deduction – an amount which qualifies as a contribution to an SMSF may be deductible to the contributor (e.g., employer or individual). Where this is the case, a tax deduction can only be claimed for the income year in which the contribution is actually made. Refer to Subdivisions 290-B and 290-C of the ITAA
To be continued…
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