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ATO, Superannuation

ATO clarifies SG clearing house cut-off

Superannuation clearing house

A recent ATO guideline will benefit employers using the regulator’s Small Business Superannuation Clearing House to pay super contributions.

A change to the ATO’s recent draft Practical Compliance Guideline (PCG) 2019/D8 will benefit employers making contributions to superannuation funds via the Small Business Superannuation Clearing House (SBSCH), an SMSF technical specialist has said.

Heffron chief executive Meg Heffron said PCG 2019/D8, which was released by the ATO in December, meant employers who paid a superannuation guarantee (SG) contribution to the clearing house on or just before 30 June would now be able to claim a tax deduction for that contribution in the same financial year, despite the contribution not reaching the super fund before the 30 June cut-off.

“For 2018/19, any employer using the SBSCH who wanted the contributions to have actually landed in the relevant superannuation fund before 30 June 2019 needed to have made the contribution nearly a week earlier (24 June 2019),” Heffron said in a blog post on the firm’s website.

“Naturally this caught a great many employers out – those who made their contributions in the final few days of June 2019 discovered that they could not claim a tax deduction for them in 2018/19 because they didn’t arrive in the receiving fund early enough.”

She noted while PCG 2019/D8 did not represent a change to the law, it confirmed the ATO would allow the employer to claim a tax deduction at the time and not the following year, as long as:

  • the contribution was paid to the SBSCH on or before 30 June,
  • all the relevant information required was given to the SBSCH so that it could pass the contribution on to the fund at the time the contribution was made, and
  • the payment was not dishonoured or returned.

“For example, an employer could claim a deduction for contributions received by the SBSCH on 30 June 2020 in 2019/20 rather than 2020/21, even though those contributions won’t be received by the relevant superannuation fund until July 2020,” she said.

She also pointed out PCG 2019/D8 would not change the treatment of such payments for contribution cap purposes, despite bringing SG and tax deductibility into alignment.

“The PCG only proposes to change the treatment for the SBSCH, not all clearing houses, so many employers still need to focus on getting the contributions to their clearing houses much earlier than 30 June each year,” she added.

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