The passing of the free Medicare clearing house legislation has been hailed by some super industry bodies and decried by private clearing houses and the Federal Opposition.

Pauline Vamos, ASFA’s CEO, said the free clearing house would “supplement existing clearing houses that are offered by both funds and independent providers”.

One of those independent providers, SuperChoice, has announced its own free service, S-Pay, for small- to medium-employers (SMEs) with fewer than 20 employees.

SuperChoice’s CEO, Peter Philip, questioned why the Federal Government needed to “reinvent the wheel”.

“The super industry now has a large and tough competitor that will inevitably create some market distortion in the small business market,” he said.

The Medicare Clearing House Legislation (Tax Laws Amendment [2010 Measures No. 1] Bill 2010) was passed in mid-May by both houses of Parliament with no amendments.

A Medicare spokesperson said it was on target to allow employers to register with the clearing house by the end of last month and to make contributions from 1 July.

Medicare would use funds’ ABNs to validate that they were APRA-regulated and to determine bank account details.

When the employer wished to make super contributions, they would log into the Medicare system, select the employees for whom they were paying and enter the contribution amounts.

The Medicare system would then issue the employer with an electronic invoice and an amount to pay.

Once the employer paid Medicare the correct amount, the money would be sent to designated funds. Medicare intended to run a daily process to aggregate contributions on a fund basis.

Provided the contributed amount matched the invoiced amount, the employer contributions would be distributed to the destination funds within 24 hours of receipt by Medicare.

SMEs that used the clearing house service would meet their Superannuation Guarantee (SG) obligations when payment of the correct amount was made to the clearing house.

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