Clients warned over clearing house processing time frame

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Clients warned over clearing house processing time frame

Deloitte Private partner Liz Westover has said it is very important that employers allow up to 10 days when using superannuation clearing houses to make contributions to a super fund. 

Being the end of June, if clients had previously relied on a particular clearing house, it might be worthwhile finding another method of paying those contributions. 

Ms Westover said at the Chartered Accountants Australia and New Zealand SMSF Day 2019 Workshop that “I always warn people about the use of clearing houses. They can be very useful for processing or distributing monies, it’s one payment and they disseminate all the information and monies to the super fund, but the fine print states that it can take up to 10 days to actually process those contributions.” 

“I have seen people getting caught out by this one. They think that their Super Guarantee (SG) obligations are met on payment to the clearing house; it’s not. Your obligation for SG is met when the money hits the super fund.” 

 “So, if you’re relying on clearing houses, make sure you’re allowing for these 10 days. If you’re talking about the 28th day after the end of the quarter, you’ll actually need to meet those obligations by the 18th to make sure you’re meeting those obligations.” 

In the lead-up to end of the financial year, Ms Westover said it is also important for SMSF members to confirm their employer contributions if they’re thinking of making personal super contributions so that they don’t inadvertently breach their concessional contributions cap. 

“The real catch is that if you’ve got an employer who needs another tax deduction. So, I’ve seen situations where they will bring forward the contribution that they would normally make in July and they bring it forward to June so that they get the additional tax deduction in June; that will impact on people’s ability to make personal contributions,” Ms Westover explained.  

“In previous years, it probably didn’t matter so much because people were ineligible to make personal super contributions due to the old 20 per cent rule, but now that they can, you need to be a little bit more alert to how those employer contributions are going in and what cap space you actually have for personal contribution.” 

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Source: accountantsdaily

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