Small Business Super Clearing House and SMSF bank account validation

To safeguard retirement savings held in self managed superannuation funds (SMSFs) from fraud and misconduct, the ATO is rolling out new security features. One new feature consists of checking for a match between an employee’s SMSF bank account details and the SMSF record when electronic payments are made via the Small Business Superannuation Clearing House (SBSCH). Where there is a mismatch, the SBSCH cannot accept payments to an employee’s SMSF until the error is resolved.  

Briefly, the SBSCH is a free, online superannuation payments service that small businesses can use to pay their super contributions in one transaction. It’s designed to simplify the process of making super contributions on behalf of employees. The service is available to small businesses with 19 or fewer employees, or businesses with an annual aggregated turnover of less than $10 million.

The SBSCH is part of ATO Online Services and allows employers to meet their super guarantee obligations easily. To use the clearing house, employers can make a single electronic payment to the SBSCH, which then distributes the funds to each employee’s super fund or SMSF. This service helps reduce the time and paperwork associated with making super contributions for multiple employees across different super funds.

The rollout of the new security feature, from 15 March 2024, will check whether an employee’s SMSF bank account details match their SMSF records. Where there’s a mismatch, or where an employee has not listed their bank account details, the employer will receive an “invalid super fund bank details” error on the SBSCH payment instruction. According to the ATO, where this error occurs, the SBSCH cannot accept payments to an employee’s SMSF until the issue is resolved. 

To resolve this error, the ATO recommends employers check with employees that their SMSF bank account details exactly match those listed on the SMSF records. If those details are incorrect, or if there are no details listed, the employee should approach the trustee of the fund or a tax professional associated with the fund to update the information through ATO Online Services.  Employees with SMSFs are encouraged to ensure that fund details are correct ahead of the change to avoid any delays in their super.

When the discrepancy is resolved, employers will be able to update the employee’s SMSF bank details in SBSCH and submit payment instructions. To avoid delays for other employees, the ATO notes that SBSCH payment instructions can still be submitted for employees with valid super fund details ahead of resolution of any individual discrepancy. 

This security feature is just one of many that the ATO has been rolling out late last year and early this year to safeguard retirement savings held in SMSFs from fraud and misconduct. For example, the ATO commenced sending rollover alerts to members of SMSFs when a super fund uses the SMSF verification service to verify a fund’s details with the intention to roll super benefits into an SMSF. This can alert members of SMSFs to an unauthorised rollover so they can act to stop it in its tracks. 

Other alerts for SMSF changes have also been implemented by the ATO to tackle fraudulent use of taxpayer details to register new SMSFs. These fraudulently registered SMSFs are often then used to commit further offences, such as illegal early release payments of super. Taxpayers who are alerted by the ATO in relation to a change made to an existing SMSF should contact either the trustees or the tax professional associated with the fund to verify the change in the first instance. Where it is subsequently determined that the change was made incorrectly or was not unauthorised, taxpayers are encouraged to contact the ATO immediately.

Source: www.ato.gov.au/businesses-and-organisations/super-for-employers/paying-super-contributions/how-to-pay-super/small-business-superannuation-clearing-house 
www.ato.gov.au/businesses-and-organisations/small-business-newsroom/upcoming-changes-in-the-small-business-super-clearing-house