The Treasury Laws Amendment (Protecting Your Superannuation Package) Act 2019 will see the ATO transfer such accounts and, where possible, consolidate the superannuation on the holder’s behalf.
This means that if a provider has an inactive super account with less than A$6,000 (£3,272; $4,118; €3,665), it will be required to pay it to ATO.
The taxman will also be able to collect unclaimed superannuation money and put it in one of the client’s active accounts.
The amended legislation will become effective on the 1 July 2019.
According to the ATO a super account is defined as “inactive low-balance” if:
- No amount has been received by a fund for crediting to that account within the last 16 months,
- The account balance is less than AU$6,000,
- You have not met a prescribed condition of release,
- The account is not a defined benefit account,
- There is no insurance on the account,
- The account is not held in a self-managed super fund (SMSF) or small Australian Prudential Regulation Authority (APRA) fund.
However, if in the last 16 months the account holder has: changed their investment options, changed their insurance coverage, made or amended a beneficiary nomination, or there was a sum owed to the provider, then their account will not qualify as an inactive low-balance one.
Providers will also need to identify such accounts twice a year – on 30 June (statement date on 31 October of the same year) and on 31 December (statement date on 30 April of the following year) – and pay the amount to the ATO by the statement date.
Account holders won’t need to do anything, unless they chose not to take part in the scheme, and in that case they need to do so by filing a written declaration to the ATO.
For clarity, the taxman has also provided a case study looking at a woman called Jane, who has a superannuation account, and the options that are available to her.
“Jane has a super account with a balance of $4,500 on 30 June 2019. It has received no contributions in 18 months. Jane wants to keep this account, so to ensure it is not transferred to the ATO as an inactive low-balance account, Jane completes the Inactive low-balance accounts – Authorising your fund to provide a written declaration to the ATO form and sends it to her fund on 28 September 2019.
“Jane’s fund then provides written notice of the declaration to us on 30 October 2019. Jane’s account is not considered an inactive low-balance account and that status will remain in place until the 31 December 2020.
“If Jane’s account meets the criteria of being an inactive low balance account at the 30 June 2021 and if she doesn’t provide another written declaration, her fund will report and pay this account to us on the 31 October 2021 statement date.”