Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012
The Gillard Government will bring on for debate the Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012 today after the Senate Economics Committee considered the Bill and the majority report made one recommendation – that the Bill be passed.
The Committee found that the reforms will be of significant benefit to consumers as they help reunite people with their unclaimed money sooner and protect the real value of that money while it remains unclaimed.
Under the reforms, lost super and bank accounts will stop being eroded by fees and inflation, be paid interest and reunited with their owners sooner.
The reforms will ensure this lost money is properly protected so people can get what is rightfully theirs.
For example, Treasury estimates that under the current rules, a 20 year old with $1,000 in super can unknowingly have their super savings eroded to just $418 after five years by a range of fees and deductions. While a 30 year old with $2,000 can have their super savings eroded to just $1,250 after five years.
As a result of the Government reforms, the same 20 year old will be able to claim $1,131 from the Australian Tax Office after five years, a boost to their superannuation savings of over $700 compared with current arrangements. And the same 30 year old will be able to claim $2,263 after five years, a boost of over $1,000 to their superannuation savings.
Following consultations, the Government will amend the Bill to provide authorised deposit-taking institutions, First Home Savers Account providers, life insurers and superannuation funds more time for implementation. They will now have until 31 May 2013 to report on and transfer lost accounts and other lost moneys to Australian Securities and Investments Commission or the ATO as appropriate.
To improve certainty for industry, the Government will also clarify a number of technical issues through regulation.
To avoid capturing accounts unintentionally, the Government will introduce regulations so that children’s accounts will still need to be inactive for seven years before being treated as lost. In addition, regulations will specify that First Home Saver Accounts will be excluded until the requirement to make a deposit in four years has been met.
The regulations will also clarify that term deposits remain excluded and sub-accounts will continue to be treated as part of a parent account when determining whether there has been activity on an account in the last three years. Linked accounts (that is, an account that a customer must hold as a condition of holding another account with the same bank, building society or credit union) and mortgage offset accounts will be treated similarly.
The regulations will also clarify that accounts that are frozen by a court order or other legal requirement will also be excluded while they remain frozen and that the three year inactivity period will restart when the freeze is lifted.
The regulations will also clarify that superannuation accounts that have been active in the last 12 months, but where the member is uncontactable, will not be transferred to the ATO.
26 November 2012