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Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012

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2010-2011-2012

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

SENATE

 

 

 

Treasury legislation amendment (unclaimed money and other measures) bill 2012

 

 

 

 

Revised EXPLANATORY MEMORANDUM

 

 

(Circulated by the authority of the

Deputy Prime Minister and Treasurer, the Hon Wayne Swan MP)

 

This memorandum takes account of amendments made by the House of Representatives to the bill as introduced



Table of contents

Glossary                                                                                                               1

General outline and financial impact............................................................ 3

Chapter 1               Schedule 1 — Banking....................................................... 5

Chapter 2               Schedule 2 — First Home Saver Accounts................... 11

Chapter 3               Schedule 3 — Life Insurance.......................................... 15

Chapter 4               Schedule 4 — Superannuation...................................... 19

Chapter 5               Schedule 5 — Corporations............................................. 25

Chapter 6               Statement of Compatibility with Human Rights........... 29

Index                                                                                                                  31

 



The following abbreviations and acronyms are used throughout this explanatory memorandum.

Abbreviation

Definition

ADI

Authorised Deposit-taking Institution

ASIC

Australian Securities and Investments Commission

ATO

Australian Taxation Office

Commissioner

Commissioner of Taxation

CPI

Consumer Price Index

CUMSA

Companies and Unclaimed Moneys Special Account

FHSA

First Home Saver Account

FMD

Farm Management Deposit

RSA

Retirement Savings Account

SUMLMA

Superannuation (Unclaimed Money and Lost Members) Act 1999



Outline

The Bill makes amendments to the Banking Act 1959, First Home Saver Accounts Act 2008, Life Insurance Act 1995, Superannuation (Unclaimed Money and Lost Members) Act 1999, Australian Securities and Investments Commission Act 2001, and Corporations Act 2001 to give effect to the unclaimed moneys measures announced in the 2012-13 Mid-Year Economic and Fiscal Outlook (MYEFO). 

The Bill will bring forward the time at which money is recognised under the relevant law as lost or unclaimed, helping to reunite people with their money earlier, and will protect superannuation account balances transferred to the Australian Taxation Office (ATO) from erosion by fees and charges.

The Bill will set transitional arrangements for authorised deposit-taking institutions (ADIs), First Home Saver Account (FHSA) providers, life insurers, and superannuation funds, to provide more time for them to implement the changes.  The Bill will provide greater flexibility in setting minimum unclaimed bank amount that must be reported and transferred to the Australian Securities and Investments Commission (ASIC). 

The Bill will for the first time enable the payment of interest on unclaimed moneys paid. 

Date of effect :  Sections 1 to 3 commence the day this Act receives Royal Assent.  Item 8 of Schedule 1, item 6 of Schedule 2, item 4 of Schedule 3, items 1 to 4, 7 and 8 of Schedule 4, and Schedule 5 commence the day after Royal Assent.  Items 1 to 7 of Schedule 1, items 1 to 5 of Schedule 2, and items 1 to 3 of Schedule 3 commence on 1 July 2013.  Items 5 and 6 of Schedule 4 commence on 30 December 2012.

Proposal announced The measures were announced in the 2012-13 MYEFO.

Financial impact :  Measures in Schedules 1, 2 and 3 are estimated to provide savings to the Budget of $92.3 million over the forward estimates period; measures in Schedule 4 are estimated to provide savings to the Budget of $675.2 million over the forward estimates period; and measures in Schedule 5 are estimated to provide savings to the Budget of $118.5 million over the forward estimates period.

Human rights implications :  This Bill does not raise any human rights issues. 

Compliance cost impact Low

Summary of regulation impact statement

Regulation impact on business

Impact Low

Main points :

•        Office of Best Practice has advised that a Regulation Impact Statement is not required. 



Chapter 1          

Schedule 1 — Banking

Outline of chapter

1.1                   Schedule 1 to the Bill will amend section 69 of the Banking Act 1959 (Banking Act) to provide for new arrangements for unclaimed moneys held by ADIs. 

Context of amendments

1.2                   Currently, ADIs are required to report on and pay to the Commonwealth unclaimed moneys (Section 69, Banking Act). 

1.3                   The provisions in the Banking Act do not provide a clear assessment date for ADIs to assess unclaimed moneys. 

1.4                   Subsection 69(3) of the Banking Act states that an ADI shall deliver a statement of unclaimed moneys within three months after the 31 December in each year, but does not specify an assessment date for ADIs to assess unclaimed moneys as at that date.  In practice, many ADIs have interpreted this requirement as containing an implied assessment date of 31 December but have sought clarification that this interpretation is correct.

1.5                   There are two separate limbs to the definition of unclaimed moneys One consists of moneys to the credit of an account that has not been operated on either by deposit or withdrawal for a period of not less than seven years.  The other applies to amounts legally payable by an ADI but in respect of which the time within which proceedings may be taken for the recovery thereof has expired (Subsection 69(1), Banking Act).  Unclaimed moneys include amounts that meet either test.

1.6                   Unclaimed moneys held in retirement savings accounts (RSAs) (within the meaning of the Retirement Savings Accounts Act 1997 ) and FHSAs (within the meaning of the First Home Saver Accounts Act 2008 ) are excluded from the unclaimed moneys provisions of the Banking Act (Subsection 69(3), Banking Act).

1.7                   Details of unclaimed moneys, including the name and last known address of the owner, the amount due and, if relevant, the office or branch where the account was kept are published by ASIC.  These details can also be searched via the ASIC web site (Subsection 69(9), Banking Act).

1.8                   Under the current provision, unclaimed moneys which are not less than $100 or a higher prescribed amount are required to be reported and transferred (Subsection 69(3), Banking Act).  Consequently, regulations may only prescribe an amount higher than $100.  The current prescribed amount is $500, which was set by the Banking (Unclaimed Moneys) Regulations 1993

1.9                   There is no minimum for other types of unclaimed moneys.  Further, the current threshold means that the details of smaller accounts are never published in accordance with subsection 69(9) and so cannot be found by their rightful owners via a search using the facility on the ASIC website.

1.10               Owners of unclaimed moneys are able to lodge claims for the return of the value of their money at any time through funds appropriated by Parliament for that purpose (Subsections 69(7), 69(7A) and 69(8), Banking Act).

1.11               The new arrangements will reduce the period before an amount payable by an ADI is treated as unclaimed moneys to three years from 1 July 2013.  They also allow for the payment of interest on unclaimed moneys by the Commonwealth from 1 July 2013, as determined by regulations. 

1.12               The new arrangements will provide clarity to ADIs for assessing unclaimed moneys and consistency throughout the Bill; amend the minimum unclaimed money amount that is required to be reported and transferred to ASIC from $100 or a higher prescribed amount to be $100 or such other amount as may be prescribed; and set a transitional arrangement for ADIs to implement the changes.

Summary of new law

1.13               The new law amends the Banking Act to change the unclaimed moneys period from seven years to three years from 1 July 2013 and provide for the payment of interest on unclaimed moneys claimed after 1 July 2013.

1.14               The new law specifies a date for assessing unclaimed moneys; provides flexibility to vary the minimum threshold for unclaimed moneys to be transferred to ASIC to be an amount that is either higher or lower than $100; and sets a transitional arrangement to give ADIs more time and flexibility to assess and transfer unclaimed moneys to ASIC in accordance with the period change. 

Comparison of key features of new law and current law

New law

Current law

Amounts held by ADIs (other than in RSAs or FHSAs) will become unclaimed moneys three years after the last deposit or withdrawal (other than fees or interest).

Amounts held by ADIs (other than in RSAs or FHSAs) become unclaimed moneys seven years after the last deposit or withdrawal (other than fees or interest).

Claimants are able to seek the return of unclaimed moneys at any time through an appropriation by Parliament.  This would include an interest component.

Claimants are able to seek the return of unclaimed moneys at any time through an appropriation by Parliament.  No interest is payable .

Specifies ‘as at end of the year’ (that is, 31 December each year) as assessment date for unclaimed moneys.

Do not specify a date for assessing unclaimed moneys.

Allows setting a minimum threshold for unclaimed moneys to be transferred to ASIC at any amount. 

Allows setting a minimum threshold of $100 or a prescribed higher amount to be transferred to ASIC.

ADIs are required to make a supplementary assessment and payment by 31 May 2013 in addition to the seven year assessment and payment currently required by 31 March 2013. 

The default assessment date f or supplementary payment is 30 May 2013.  However, ADIs could pick any date as their assessment date, between 31 December 2012 and 29 May 2013. 

ADIs do not need to assess the seven-year unclaimed amount again in the supplementary assessment as they already did so in the original assessment.  This means that the supplementary assessment does not need to include the seven-year unclaimed amount to avoid double counting. 

No provision is for transition.

Detailed explanation of new law

1.15               The Bill modifies the definition of unclaimed moneys in subsection 69(1) by reducing the time before such moneys become unclaimed moneys from seven years to three years.  The Bill also allows for the number of years and when it commences to be varied via regulations.  [Schedule 1, item 1, subsection 69(1)]

1.16               The Bill confirms that the definition of unclaimed moneys contained in subsection 69(1) does not include farm management deposits (FMDs), which are dealt with by subsection 69(1A), or accounts or deposits which are excluded by regulations as permitted by subsections 69(1B), 69(1C), 69(1D) or 69(1E).  [Schedule 1, item 2, subsection 69(1AA)]

1.17               The Bill amends the definition of unclaimed moneys with respect to FMDs by making equivalent amendments to subsection 69(1A) to those being made to subsection 69(1).  [Schedule 1, item 3, paragraphs 69(1A)(b), 69(1A)(c)]

1.18               Regulations may exclude certain accounts and deposits from being treated as unclaimed moneys.  [Schedule 1, item 4, subsections 69(1B), 69(1C), 69(1D), 69(1E)]

1.19               The Bill specifies the assessment date, which is at end of the year, in subsection 69(3).  That means all ADIs will be required to assess the unclaimed moneys as at end of 31 December each year.  [Schedule 1, item 4A, subsections 69(3)]

1.20               The Bill amends subsection 69(3) to allow the threshold to be set through regulation, either higher than $100 or lower than $100.  [Schedule 1, item 4B, subsections 69(3)]

1.21               The Bill also provides that owners of unclaimed moneys will be entitled to a payment of interest by the Commonwealth, which will be calculated according to regulations.  This interest does not accrue prior to 1 July 2013.  The regulations may prescribe different rates for different periods over which interest accrues.  It is intended that interest will be calculated in accordance with the Consumer Price Index (CPI) and that a nil rate will be able to be prescribed where the CPI does not change between given periods.  [Schedule 1, items 5 and 7, subsections 69(7AA), 69(7AB), 69(7AC), 69(8)]

1.22               As a transitional measure, the Bill requires ADIs to make a supplementary assessment and transfer of accounts to ASIC.  ADIs will assess unclaimed moneys as at 31 December 2012 in line with the original seven-year period; then in early 2013, ADIs will have a supplementary assessment and payment in line with the revised three-year period.  [Schedule 1, item 8, section 69]  

1.23               The default assessment day for the supplementary statement and payment obligations will be 30 May 2013.  However, it also provides flexibility to ADIs to nominate an alternative assessment date between 31 December 2012 and 29 May 2013.  This is intended to provide flexibility for ADIs to nominate the assessment date that is most appropriate for their particular systems.  ADIs will be required to provide the supplementary statement and payment on or before 31 May 2013.  [Schedule 1, item 8, section 69]

1.24               For the supplementary assessment, ADIs do not need to count the unclaimed seven-year moneys so as to avoid double counting of accounts caught by the standard statement and payment on or before 31 March 2013.  [Schedule 1, item 8, section 69]

Example 1.1  

XYZ bank has assessed its unclaimed moneys as at 31 December 2012 for the original assessment (seven-year inactive period) and will transfer the moneys to ASIC by 31 March 2013.  The bank then needs to assess its unclaimed moneys again for supplementary assessment, reporting and transfer.  If it does not nominate an alternative assessment date, it should do the supplementary assessment based on the three-year definition of unclaimed moneys as at 30 May 2013.  It must then provide a supplementary statement and payment on or before 31 May 2013.

Example 1.2  

If the bank nominates 31 December 2012 as its assessment date, it must still complete its reporting and payment obligations based on the seven-year definition by 31 March 2013.  However, it may use 31 December 2012 as the date at which to assess unclaimed moneys using the three-year definition for the supplementary statement and payment that is due by 31 May 2013.  It is not required to double count accounts in the two statements and payments. 

Example 1.3  

The XYZ bank could make a single payment to support the two statements instead of making a separate supplementary payment.  The bank has to nominate 31  December 2012 as its assessment date for supplementary payment and assess the moneys in line with the three-year period which includes the seven-year unclaimed moneys and transfer the moneys to ASIC by 31 March 2013.

Application and transitional provisions

1.25               Items 1 to 7 of Schedule 1 commence on 1 July 2013, and item 8 of Schedule 1 commences the day after this Act receives Royal Assent. 



Chapter 2          

Schedule 2 — First Home Saver Accounts

Outline of chapter

2.1                   Schedule 2 to the Bill amends the First Home Saver Accounts Act 2008 (FHSA Act) to provide for new arrangements for unclaimed moneys held by FHSA providers.

Context of amendments

2.2                   Currently, FHSA providers within the meaning of the FHSA Act are required to report on and pay unclaimed moneys to ASIC.  Unclaimed moneys are FHSAs where there has not been a contribution or withdrawal (other than fees or taxes) for a period of not less than seven years and the FHSA provider has been unable to contact the FHSA holder (Sections 17A, 51A and 51B, FHSA Act). 

2.3                   ASIC may publish details relating to unclaimed moneys from FHSAs (Section 51D, FHSA Act).

2.4                   Owners of unclaimed moneys are able to lodge claims for the return of the value of their money at any time through funds appropriated by Parliament for that purpose (Section 51C, FHSA Act).

2.5                   The new arrangements will reduce the period before a FHSA is treated as unclaimed moneys to three years from 1 July 2013.  They also allow for the payment of interest from 1 July 2013.

2.6                   The new arrangements will provide a transitional arrangement for FHSA providers to assess and transfer unclaimed moneys to ASIC. 

Summary of new law

2.7                   The new law will amend sections 17A and 51C of the FHSA Act to change the unclaimed moneys period from seven years to three years and provide for the payment of interest on unclaimed moneys claimed after 1 July 2013. 

2.8                   The new law sets a transitional arrangement for FHSA providers to provide more time and flexibility for them to assess unclaimed moneys and transfer to ASIC in accordance with the period change. 

Comparison of key features of new law and current law

New law

Current law

Amounts held by FHSA providers become unclaimed moneys three years after the last contribution or withdrawal (other than fees, taxes or interest) and after the FHSA provider has made reasonable efforts to contact the FHSA holder.

Amounts held by FHSA providers become unclaimed moneys seven years after the last contribution or withdrawal (other than fees, taxes or interest) and after the FHSA provider has made reasonable efforts to contact the FHSA holder.

Claimants are able to seek the return of unclaimed moneys at any time through an appropriation by Parliament.  This would include an interest component.

Claimants are able to seek the return of unclaimed moneys at any time through an appropriation by Parliament.  No interest is payable.

FHSA providers are required to make a supplementary assessment and payment by 31 May 2013 in addition to the seven year assessment and payment currently required by 31 March 2013.

The default assessment date is 30 May 2013for the supplementary payment.  However, providers could pick any date as their assessment date, between 31 December 2012 and 29 May 2013. 

Providers do not need to assess the seven-year unclaimed amount again in the supplementary assessment as they already did so in the original assessment.  This means that the supplementary assessment does not need to include the seven-year unclaimed amount to avoid double counting. 

No provision is for transition.

Detailed explanation of new law

2.9                   The Bill amends the definition of unclaimed moneys by adding additional limbs to the definition of unclaimed moneys.  Accordingly the test currently contained in section 17A is renumbered as subsection 17A(1).  [Schedule 2, item 1, section 17A]

2.10               The Bill changes the time period before which a FHSA become unclaimed moneys from seven years to three years or such longer period as may be specified in regulations.  [Schedule 2, item 2, paragraph 17A(a)]

2.11               Regulations may specify additional conditions that must be met before a FHSA will become unclaimed moneys.  [Schedule 2, item 3, subsections 17A(2), 17A(3), 17A(4)]

2.12               The Bill also provides that owners of unclaimed moneys will be entitled to a payment of interest, which will be calculated according to the regulations.  This interest does not accrue prior to 1 July 2013.  The regulations may prescribe different rates for different periods over which interest accrues.  It is intended that interest will be calculated in accordance with the Consumer Price Index (CPI) and that a nil rate will be able to be prescribed where the CPI does not change between given periods.  [Schedule 2, item 4, subsections 51C(1A), 51C(1B), 51C(1C)]

2.13               The Bill requires that FHSA providers must pass on any amount of interest paid by ASIC in relation to a FHSA that has been treated as unclaimed moneys.  [Schedule 2, item 5, paragraph 51C(2)(a)]

2.14               The Bill requires FHSA providers to make a supplementary assessment and payment.  Providers will assess unclaimed moneys as at 31 December 2012 in line with the original seven-year period; then in early 2013, providers will have a supplementary assessment and payment in line with the revised three-year period.  [Schedule 2, item 6, section 17A, 51A]

2.15               Providers are allowed to choose an assessment date for the supplementary assessment and payment; however, they must supply the supplementary statement and make the supplementary payment by 31 May 2013.  [Schedule 2, item 6, sections 17A, 51A]

2.16               For the supplementary assessment, providers should not count the unclaimed seven-year moneys so as to avoid double counting.  [Schedule 2, item 6, sections 17A, 51A]

Example 2.1  

Please refer to Examples 1.1 to 1.3.  The similar scenarios apply to FHSA providers.

Application and transitional provisions

2.17               Items 1 to 5 in of Schedule 2 commence on 1 July 2013, and item 6 of Schedule 2 commence the day after this Act receives Royal Assent.



Chapter 3          

Schedule 3 — Life Insurance

Outline of chapter

3.1                   Schedule 3 to the Bill amends section 216 of the Life Insurance Act 1995 (LI Act) to provide for the new arrangements for unclaimed life insurance moneys.

Context of amendments

3.2                   Currently, life insurance companies within the meaning of the LI Act are required to report on and pay unclaimed moneys to the Commonwealth.  There are two limbs to the definition of unclaimed moneys in the LI Act.  Unclaimed moneys include sums payable on the maturity of a policy which is not claimed within seven years after the maturity date of the policy.  Unclaimed moneys also includes sums of money that have become legally payable with respect to policies where the time within which proceedings may be taken for their recovery (Subsections 216(1), 216(3) and 216(15), LI Act). 

3.3                   ASIC must maintain a register that contains details of unclaimed moneys subject to the LI Act (Subsection 216(13), LI Act).

3.4                   Owners of unclaimed moneys are able to lodge claims for the return of the value of their money at any time through funds appropriated by Parliament for that purpose (Subsections 216(7) and 216(12), LI Act).

3.5                   The new arrangements will reduce the period before life insurance moneys are treated as unclaimed moneys to three years.  They also allow for the payment of interest from 1 July 2013.

3.6                   The new arrangements will provide a transitional arrangement for life insurers to assess and transfer unclaimed moneys to ASIC.

Summary of new law

3.7                   The new law amends the LI Act to change the unclaimed moneys period from seven years to three years and provide for the payment of interest on unclaimed moneys claimed after 1 July 2013.

3.8                   The new law sets a transitional arrangement for life insurers to provide more time and flexibility for them to assess unclaimed moneys and transfer to ASIC in accordance with the period change. 

Comparison of key features of new law and current law

New law

Current law

Life insurance amounts become unclaimed moneys three years after a policy matures.

Life insurance amounts become unclaimed moneys seven years after a policy matures.

Claimants are able to seek the return of unclaimed moneys at any time through an appropriation by Parliament.  This would include an interest component.

Claimants are able to seek the return of unclaimed moneys at any time through an appropriation by Parliament.  No interest is payable.

Life insurers are required to make a supplementary assessment and payment by 31 May 2013 in addition to the seven year assessment and payment currently required by 31 March 2013. 

The default assessment date is 30 May 2013 for the supplementary payment.  However, life insurers could pick any date as their assessment date, between 31 December 2012 and 29 May 2013.

Life insurers do not need to assess the seven-year unclaimed amount again in the supplementary assessment as they already did so in the original assessment.  This means that the supplementary assessment does not need to include the seven-year unclaimed amount to avoid double counting. 

No provision is for transition.

Detailed explanation of new law

3.9                   The Bill modifies subsections 216(15), paragraph (c) to change the time period before life insurance moneys become unclaimed moneys from seven years to three years.  [Schedule 3, item 3, subsection 216(15)]

3.10               The Bill provides that owners of unclaimed moneys will be entitled to a payment of interest, which will be calculated according to the regulations.  This interest does not accrue prior to 1 July 2013.  The regulations may prescribe different rates for different periods over which interest accrues.  It is intended that interest will be calculated in accordance with the Consumer Price Index (CPI) and that a nil rate will be able to be prescribed where the CPI does not change between given periods.  [Schedule 3, item 1, subsections 216(7A), 216(7B), 216(7C)]

3.11               The Bill requires life insurers to make a supplementary assessment and payment.  Insurers will assess unclaimed moneys as at 31 December 2012 in line with the original seven-year period; then in early 2013, insurers will have a supplementary assessment and payment in line with the revised three-year period.  [Schedule 3, item 4, section 216]

3.12               Under the item, insurers are allowed to choose an assessment date for the supplementary assessment and payment; however, they must make the supplementary payment by 31 May 2013.  [Schedule 3, item 4, section 216]

3.13               For the supplementary assessment, insurers should not double count the unclaimed seven-year moneys.  [Schedule 3, item 4, section 216]

Example 3.1  

Please refer to Examples 1.1 to 1.3.  The similar scenarios apply to life insurers.

Application and transitional provisions

3.14               Items 1 to 3 of Schedule 3 commence on 1 July 2013, and item 4 of Schedule 3 commences the day after this Act receives Royal Assent. 



Chapter 4          

Schedule 4 — Superannuation

Outline of chapter

4.1                   Schedule 4 to the Bill amends the Superannuation (Unclaimed Money and Lost Members) Act 1999 ( SUMLM Act ) to change arrangements for the transfer of lost member accounts to the Commissioner of Taxation (Commissioner) and to provide for the payment of interest on unclaimed superannuation money. 

4.2                   Small lost accounts with balances of less than $2,000 and accounts of unidentifiable members that have been inactive for 12 months will be required to be paid to the Commissioner.  Interest will also be paid on unclaimed superannuation money at the time this money is claimed.  This will accrue and be payable from 1 July 2013 on all unclaimed superannuation money.

4.3                   All references to legislative provisions in this chapter are references to the SUMLM Act unless otherwise stated.

Context of amendments

4.4                   Superannuation providers are required to transfer unclaimed monies to the Commissioner.  The term ‘unclaimed superannuation monies’ refers to three types of unclaimed money: 

•        ‘general’ unclaimed superannuation money;

•        unclaimed superannuation of former temporary residents; and

•        lost member accounts, that is, small accounts of lost members, and inactive accounts of unidentifiable members.

4.5                   The unclaimed monies provisions do not apply to defined benefit interests.

4.6                   Individuals are able to claim back monies from the Commissioner at any time.  Interest on these monies is currently only payable in the case of former temporary residents who become an Australian or New Zealand citizen or hold a permanent resident visa.

4.7                   Superannuation providers must give the Commissioner details relating to small accounts of lost members, and inactive accounts of unidentifiable lost members, and pay the value of these accounts to the Commissioner.  These details are currently provided to the Commissioner as at 31 December and 30 June each year, with payments then being payable to the Commissioner on 30 April and 31 October each year respectively.

4.8                   The new arrangements will enhance the current strategies employed by the ATO to reunite members with lost super accounts, aiming to reduce the number of unnecessary and inactive accounts. 

4.9                   Transferring more small lost accounts to the ATO will ensure they are properly protected from being eroded by fees and charges.  The payment of interest from 1 July 2013 on amounts reclaimed from the ATO will further boost individuals’ retirement savings. 

4.10               The Department of the Treasury estimates that under the current rules, a 20-year-old with $1,000 in superannuation can unknowingly have their super savings eroded to just $418 after five years by a range of fees and deductions.  Fees and insurance charges typically exceed average investment earnings even for accounts with $2,000.  A 30-year-old with $2,000 can unknowingly have their super savings eroded to just $1,250 after five years.

4.11               As a result of the new arrangements, a 20-year-old with $1,000 currently inactive in super, is expected to be able to claim $1,131 from the ATO after five years (assuming average Consumer Price Index (CPI) inflation of 2.5 per cent), a boost to their superannuation savings of over $700 compared with current arrangements.  A 30-year-old with $2,000 is expected to be able to claim $2,263 from the ATO after five years, a boost to their superannuation savings of over $1,000 compared with current arrangements. 

Summary of new law

4.12               The balance threshold below which small lost accounts will be required to be transferred to the Commissioner will increase from $200 to $2,000.  The period of inactivity before inactive accounts of unidentifiable members will be required to be transferred to the Commissioner will be decreased from five years to 12 months.

4.13               From 1 July 2013, the Commissioner must pay interest on all unclaimed superannuation money payments in respect of individuals. 

4.14               The amount of interest will be worked out in accordance with the regulations.  The regulations may prescribe different rates for different periods over which interest accrues.  It is intended that interest will be calculated in accordance with the Consumer Price Index (CPI) and that a nil rate will be able to be prescribed where the CPI does not change between given periods.

4.15               Superannuation providers are required to pay certain lost member accounts as at the end of an unclaimed money day to the Commissioner of Taxation (Commissioner) by the end of the scheduled statement day.  The account holder must still be a lost member immediately before the payment is made.

4.16               The Commissioner may specify dates for unclaimed money statements and payment, by legislative instrument under section 15A of the SUMLM Act.

4.17               The current instrument specifies that for the 31 December unclaimed money day the scheduled statement day is 30 April of the following year. 

Comparison of key features of new law and current law

New law

Current law

Small lost accounts with balances of less than $2,000 are required to be transferred to the Commissioner.

Small lost accounts with balances of less than $200 are required to be transferred to the Commissioner.

Accounts of unidentifiable members that have been inactive for the last 12 months are required to be transferred to the Commissioner.

Accounts of unidentifiable members that have been inactive for the last five years are required to be transferred to the Commissioner.

Interest will accrue and be paid on all unclaimed superannuation monies from 1 July 2013.

Interest is paid on unclaimed superannuation of former temporary residents who become an Australian or New Zealand citizen or hold a permanent resident visa.

Superannuation providers are required to pay the balances of certain lost member accounts to the Commissioner by 31 May 2013 for the 31 December 2012 unclaimed money day.  This is a one-off change.

The current legislative instrument specifies a due date for payment of certain lost member accounts of 30 April in the following year for the 31 December unclaimed money day.

Detailed explanation of new law

4.18               The balance threshold below which small accounts of lost members will be required to be transferred to the Commissioner will increase from $200 to $2,000.  [Schedule 4, item 5, paragraph 24(1)(b)]

4.19               The period of inactivity before inactive accounts of unidentifiable members will be required to be transferred to the Commissioner will decrease from five year to 12 months.  The superannuation provider will still need to be satisfied that it will never be possible for the provider, having regard to information reasonably available to the provider, to pay an amount to the member.  [Schedule 4, item 6, paragraph 24(2)(b)]

Example 4.1 :  A small balance account that is lost because it is uncontactable.

Jack has an account with a super fund with an account balance of $1,900.  The fund has sufficient details to identify Jack, however, two pieces of correspondence sent to him have been returned unclaimed.  On this basis, Jack’s account is lost, and on the next reporting date the fund must report and pay the balance of the account to the ATO.

Example 4.2 :  A small balance account that is lost because it is inactive.

Poppy has an account with a super fund with an account balance of $1,400.  The fund has sufficient details to identify Poppy; however, her account has not received any contributions or rollovers within the last five years.  On this basis, Poppy’s account is lost, and on the next reporting date the fund must report and pay the balance of the account to the ATO.

Example 4.3 :  A small balance account that is not lost.

Tabbles has an account with a super fund with an account balance of $1,700.  The fund has sufficient details to identify Tabbles, and correspondence sent to Tabbles is not being returned unclaimed to the fund.  Tabbles’ account has not received any contributions for over a year, as he is on an extended break from the workforce.  Tabbles’ account is not lost at this stage.  It would need to be inactive for a five year period before being deemed lost.

Example 4.4 :  An account of an unidentifiable member that is lost. 

ABC Super fund has an accumulation account for J Smith of $3,500.  J Smith’s account has not received any contributions or rollovers within the last 12 months.  As the trustee of ABC Super has no address, no date of birth, no tax file number and no employer details, the trustee has formed the view that it would never be possible for the fund to pay J Smith.  Consequently, J Smith’s account would be classified as a lost member account on 31 December 2012 and transferred to the ATO by 30 April 2013.

4.20               The Bill amends the operation of the SUMLMA to require the Commissioner to pay interest on payments of all unclaimed superannuation money that the Commissioner makes in respect of an individual under the general, former temporary resident, and lost member unclaimed money provisions from 1 July 2013. 

4.21               From 1 July 2013 interest will be paid under newly inserted subsection 24G(3A) or 24G(3B) in relation to lost member amounts paid by the Commissioner under 24G(2).  This interest does not accrue in relation to the periods before 1 July 2013.  The amount of interest will be worked out in accordance with the regulations.  The regulations may prescribe different rates for different periods over which interest accrues.  [Schedule 4, item 7, subsections 24G(3A), (3B), (3C), (3D)]

4.22               From 1 July 2013 interest will be paid under newly inserted subsection 17(2AB) or 17(2AC) in relation to general unclaimed money paid by the Commissioner under subsection 17(2).  This interest does not accrue in relation to the periods before 1 July 2013.  The amount of interest will be worked out in accordance with the regulations.  The regulations may prescribe different rates for different periods over which interest accrues.  [Schedule 4, item 1, subsections 17(2AB), (2AC), (2AD), (2AE)]

4.23               From 1 July 2013 interest will be paid under newly inserted subsection 20H(2AA) in relation to all unclaimed money payments for former temporary residents under subsection 20H(2).  The amount of interest will be worked out in accordance with the regulations.  The regulations may prescribe different rates for different periods over which interest accrues.  [Schedule 4, items 2, 3 and 4, subsections 20H(2AA), (2AB), (2A), paragraph 20H(3)(b)]

4.24               The current interest provisions for certain former temporary residents in subsection 20H(2A) will only apply to payments made before 1 July 2013.  Regulations made for the purposes of newly inserted subsection (2AA) may prescribe a different rate of interest for the accrual of interest for certain temporary residents prior to 1 July 2013.

4.25               Under the new arrangements small lost accounts with balances of less than $2,000 and accounts of unidentifiable members that have been inactive for 12 months will be required to be paid to the Commissioner.  These arrangements will apply from the 31 December 2012 unclaimed money day.  [Schedule 4, items 5 and 6, subsections 24B(1)(b)), 24B(2)(b)]

4.26               The new arrangements will apply a transitional scheduled statement day extends the date the payment due for certain lost member accounts, for the 31 December 2012 unclaimed money day from the 30 April 2013 to 31 May 2013.  This will provide more time for superannuation providers to implement the new arrangements for lost member accounts, including additional time to locate lost members.   [Schedule 4, item 8, sections 24C, 24E]

Application and transitional provisions

4.27               Items 5 and 6 of Schedule 4 commence on 30 December 2012, and items 1 to 4, 7 and 8 of Schedule 4 commence the day after this Act receives Royal Assent.



Chapter 5          

Schedule 5 — Corporations

Outline of chapter

5.1                   Schedule 5 to the Bill amends the Corporations Act 2001 (the Corporations Act) and the Australian Securities and Investments Commission Act 2001 (the ASIC Act) to close the Companies and Unclaimed Moneys Special Account (CUMSA), and establish new processes for the receipt and payment of unclaimed property.

Context of amendments

5.2                   The Australian Securities and Investments Commission (ASIC) is responsible for holding and handling unclaimed property (including unclaimed moneys) arising under the Corporations Act, on behalf of the Commonwealth.

5.3                   Currently, upon receipt of unclaimed property, ASIC must either credit the amount of the money to CUMSA (in the case of money), or sell or dispose of the property as it sees fit and credit the amount of the proceeds to CUMSA (in the case of property).  The funds are held in CUMSA for six years, after which any remaining funds are debited from CUMSA (Part 9.7, Corporations Act).

5.4                   Owners of unclaimed property are able to lodge claims for the return of the value of their property at any time while it is held in CUMSA, or afterwards through funds appropriated by Parliament for that purpose.

5.5                   The new arrangements will streamline current processes and provide for unclaimed property to be recognised directly in the Commonwealth Consolidated Revenue Fund upon receipt by ASIC.  Owners of unclaimed property continue to be able to claim and receive the return of an amount equal to the value of their property, funded by an amount appropriated by Parliament for that purpose.  The new arrangements also provide for an interest component to be paid to owners.

Summary of new law

5.6                   The new law will remove Division 1, Part 8 of the ASIC Act, which establishes CUMSA and its purposes, and amend sections 1339 and 1341 of the Corporations Act to provide for the new arrangements for the administration and distribution of unclaimed property.  The Bill provides that owners of unclaimed property will be entitled to a payment of interest, calculated according to the regulations.

Comparison of key features of new law and current law

New law

Current law

ASIC will continue to have responsibility for the holding and handling of unclaimed property.  In the case of property that is not money, ASIC must sell or dispose of the property as it sees fit.  Unclaimed property, including moneys and proceeds from the sale or disposal of property, will be remitted directly to Commonwealth consolidated revenue.

ASIC has responsibility for the holding and handling of unclaimed property.  In the case of property that is not money, ASIC must sell or dispose of the property as it sees fit.  Unclaimed property, including moneys and proceeds from the sale or disposal of property, are held in CUMSA for six years, after which time any remaining moneys are recognised in Commonwealth consolidated revenue.

Claimants of unclaimed property would continue to be able to seek the return of an amount equal to the value of their property at any time, with the moneys returned through an appropriation by Parliament.  This would include an interest component.

Claimants of unclaimed property are able to seek the return of an amount equal to the value of their property at any time, with the moneys returned through CUMSA, or an appropriation by Parliament if the money has been transferred to Commonwealth consolidated revenue. 

An interest component is not included in the repayment.  Interest accrued on the balance in CUMSA may be used to fund proposals determined by the Minister to reduce business costs and improve regulation.

Detailed explanation of new law

5.7                   The Bill repeals Division 1 of Part 8 of the ASIC Act, thereby closing CUMSA.  [Schedule 5, item 1, ASIC Act, Division 1 of Part 8; items 2 to 4, Corporations Act, section 9]

5.8                   ASIC will continue to have responsibility for the holding and handling of unclaimed property arising under the Corporations Act, under Part 9.7.

5.9                   The Bill repeals existing subsection 1339(2) which requires ASIC to credit unclaimed property to CUMSA, and replaces the provisions with new arrangements for dealing with unclaimed property.  [Schedule 5, item 5, subsection 1339(2)]

5.10               Upon the receipt of unclaimed property that is money, ASIC will continue to hold and receive moneys on behalf of the Commonwealth, which will be recognised in the Commonwealth Consolidated Revenue Fund.  Upon the receipt of unclaimed property, ASIC must sell or dispose of the property as it sees fit, and hold and receive any proceeds on behalf of the Commonwealth, with any proceeds to be recognised in the Commonwealth Consolidated Revenue Fund.  [Schedule 5, item 5, subsection 1339(2)]

5.11               The Bill repeals existing subsections 1341(1) and 1341(2), and replaces the provisions with new arrangements for the return of unclaimed property to claimants.  [Schedule 5, item 6, subsections 1341(1) and (2)]

5.12               The Bill provides that claimants of unclaimed property can continue to claim and receive the return of their property currently or previously held by ASIC on behalf of the Commonwealth.  If ASIC is satisfied that the claimant is entitled to the amount claimed, ASIC must pay the owner an amount equal to the value of the unclaimed money (in the case of money), or the proceeds received for the property (in the case of property that is not money), using funds appropriated by the Parliament for that purpose.  [Schedule 5, item 6, subsections 1341(1) and (2)]

5.13               The Bill also provides that owners will be entitled to a payment of interest on the principal value, which will be calculated according to the regulations.  This interest does not accrue prior to 1 July 2013.  The regulations may prescribe different rates for different periods over which interest accrues.  It is intended that interest will be calculated in accordance with the Consumer Price Index (CPI) and that a nil rate will be able to be prescribed where the CPI does not change between given periods.  [Schedule 5, item 8, after subsection 1341(3)]

Application and transitional provisions

5.14               The amendments in Schedule 5 commence on the day after this Act receives Royal Assent.



Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012

This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

Overview

These amendments will enhance the current strategies employed by ASIC and the ATO to reunite people with their unclaimed moneys. 

Human rights implications

The Bill does not engage any of the applicable rights or freedoms.

Conclusion

This Schedule is compatible with human rights as it does not raise any human rights issues. 

The Hon. Mr Wayne Swan, Deputy Prime Minister and Treasurer



Schedule 1:  Banking

Bill reference

Paragraph number

Item 1, subsection 69(1)

1.15

Item 2, subsection 69(1AA)

1.16

Item 3, paragraphs 69(1A)(b), 69(1A)(c)

1.17

Item 4, subsections 69(1B), 69(1C), 69(1D), 69(1E)

1.18

Item 4A, subsections 69(3)

1.19

Item 4B, subsections 69(3)

1.20

Items 5 and 7, subsections 69(7AA), 69(7AB), 69(7AC), 69(8)

1.21

Item 8, section 69

1.22, 1.23, 1.24

Schedule 2:  First Home Saver Accounts

Bill reference

Paragraph number

Item 1, section 17A

2.9

Item 2, paragraph 17A(a)

2.10

Item 3, subsections 17A(2), 17A(3), 17A(4)

2.11

Item 4, subsections 51C(1A), 51C(1B), 51C(1C)

2.12

Item 5, paragraph 51C(2)(a)

2.13

Item 6, section 17A, 51A

2.14

Item 6, sections 17A, 51A

2.15, 2.16

Schedule 3:  Life Insurance

Bill reference

Paragraph number

Item 1, subsections 216(7A), 216(7B), 216(7C)

3.10

Item 3,subsection 216(15)

3.9

Item 4, section 216

3.11, 3.12, 3.13

Schedule 4:  Superannuation

Bill reference

Paragraph number

Item 1, subsections 17(2AB), (2AC), (2AD), (2AE)

4.22

Items 2, 3 and 4, subsections 20H(2AA), (2AB), (2A), paragraph 20H(3)(b)

4.23

Item 5, paragraph 24(1)(b)

4.18

Items 5 and 6, subsections 24B(1)(b)), 24B(2)(b)

4.25

Item 6, paragraph 24(2)(b)

4.19

Item 7, subsections 24G(3A), (3B), (3C), (3D)

4.21

Item 8, sections 24C, 24E

4.26

Schedule 5:  Corporations

Bill reference

Paragraph number

Item 1, ASIC Act, Division 1 of Part 8; items 2 to 4, Corporations Act, section 9

5.7

Item 5, subsection 1339(2)

5.9

Item 5, subsection 1339(2)

5.10

Item 6, subsections 1341(1) and (2)

5.11, 5.12

Item 8, after subsection 1341(3)

5.13