The Rudd Government will provide funding of $16 million over three years to set up an optional superannuation clearing house facility to cut the red tape burden on businesses across Australia, Senator the Hon Nick Sherry, Minister for Superannuation and Corporate Law, said today.
"Labor will honour its election promise to reduce this superannuation red tape burden on employers," Minister Sherry said.
"With the introduction of super fund choice, businesses can be required to make compulsory superannuation contributions into numerous funds, potentially imposing a significant burden of paperwork and time, especially on small businesses.
"The previous Government was happy to introduce new measures but never thought about their impact on the front line, businesses across Australia - we're addressing that weakness and taking action to reduce red tape."
Where employees can choose their own superannuation fund from the many hundreds available, an employer may be required to pay superannuation into a large number of different funds, a process that can be highly onerous.
A superannuation clearing house will allow an employer to pay their contributions to a single location. The clearing house will then distribute them to the relevant superannuation funds as selected by their employees.
"The optional clearing house facility will manage employers' obligations under Superannuation Choice, including the time consuming task of checking details entered on the Choice form and distribution of contributions to the nominated funds," Minister Sherry said.
"For small businesses we're not just reducing red tape but we're also making sure that no new costs are imposed as the clearing house facility will be offered free of charge to businesses with less than 20 employees," said Minister Sherry.
Businesses that use the clearing house facility will have their legal obligation to make superannuation contributions discharged when payment of the correct amount is made to the clearing house. The facility will be available from 1 July 2009.
The Government will consult with industry prior to implementing this measure.