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Super & ATO Compliance

ABA takes aim at super clearing house rules as unfair to small business and bookkeepers

The ATO crackdown on superannuation compliance has prompted the Australian Bookkeepers Association (ABA) to call for change to Super Clearing Houses rules that would create a level playing field for businesses and their bookkeepers who want to do the right thing.

In a new awareness campaign to protect well-meaning businesses from severe penalties for late and non-payment, the ABA seeks immediate feedback on a White Paper tabled with the ATO to allow commercial super clearing houses the same status as the ATO’s Small Business Super Guarantee Clearing House (SBSGCH).

ABA Director, Peter Thorpe, says there has been legislative oversight, with a new Part 7 penalty pronouncement not dovetailing with old Super Guarantee rules, which has put respectable businesses in the firing line, and suggests a minor change could save good businesses from bankruptcy and bookkeepers and employeres from litigation.

“Most business use the convenience of commercial super clearing houses linked to their cloud accounting system to distribute super contributions, as the ATO’s SBSCH is cumbersome for batch payments of more than a few employees,” explains Peter.

“As soon as a super contribution is paid, the business then looses control of the processing of that payment,” continued Peter. “Processing times can take anywhere between 2 and 12 days, and businesses are not notified immediately of receipt of a payment, of rejected payments, nor of mistakes on amounts paid, with even overpayments prompting rejections. The critical point here is that under current legislation the employer has not paid their SG until it is safe and sound in the employee’s member account, (a date the employer will never know as the employee’s super fund is not accountable to the employer).  

“ATO auditors are now given no discretion under a new ATO Practice Statement (PSLA 2020/4) to consider a business’s intention to do the right thing,” said Peter. “The ATO is bound by the new Practice Statement that insists on severely punishing good business whose super contributions did not get processed in time, despite them depositing employee super into commercial clearing houses by the ATO’s advertised date.

“The potential is for many disastrous results where the punishment just doesn’t fit the crime,” continued Peter. “Consider a business, whose $100,000 quarterly super liability for 50 employees, had to foot a $230,000 plus SGC bill on which they could no longer claim a tax deduction, even though they paid two days earlier than the ATO advised deadline.

“Like trying to fit a square peg in a round hole, this new penalty regime try to work with old legislation that only allows ATO auditors to consider good intentions based on date of original transaction if the business uses the SBSCH.

“By allowing commercial clearing houses, most of which are reputable, publicly listed and compliant companies, to have the same status at the SBSCH, well-intentioned Australian small businesses can be treated fairly again,” said Peter. “This is a win-win for the ATO and good businesses which would make this unworkable legislation clearer and fairer.”

ABA member and respected industry representative on ATO working groups, Joanne Crompton, Director of Sydney-based bookkeepers ECJ Online, supports the critical importance of ABA’s campaign.

“I became of outraged on behalf of my clients about this systemic problem that shouldn’t happen,” said Joanne. “There are a lot of bookkeepers operating on their own, trying to do everything right and then find out about these penalties through a bad experience that can cost so much more than what seems reasonable.

“We agree employers should be made to pay on time, but there is so much out of bookkeepers and employers’ control that to cop what can be thousands of dollars through no fault of their own is unfair.

“I’m pleased the ABA is taking this further to explain these regulations and bring the combined pressure of the members to see what can be done to protect businesses and bookkeepers,” concluded Joanne.

20 Apr 2022
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