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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
Glossary
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
1
General outline and financial impact
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.
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Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012
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.
4
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
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Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012
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
6
Schedule 1 - Banking
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 Amounts held by ADIs (other than in
RSAs or FHSAs) will become RSAs or FHSAs) become unclaimed
unclaimed moneys three years after moneys seven years after the last
the last deposit or withdrawal (other deposit or withdrawal (other than fees
than fees or interest). or interest).
Claimants are able to seek the return Claimants are able to seek the return
of unclaimed moneys at any time of unclaimed moneys at any time
through an appropriation by through an appropriation by
Parliament. This would include an Parliament. No interest is payable.
interest component.
Specifies `as at end of the year' (that Do not specify a date for assessing
is, 31 December each year) as unclaimed moneys.
assessment date for unclaimed
moneys.
Allows setting a minimum threshold Allows setting a minimum threshold
for unclaimed moneys to be of $100 or a prescribed higher
transferred to ASIC at any amount. amount to be transferred to ASIC.
ADIs are required to make a No provision is for transition.
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 for
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.
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Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012
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
8
Schedule 1 - Banking
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.
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Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012
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.
10
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.
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Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012
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 Amounts held by FHSA providers
become unclaimed moneys three become unclaimed moneys seven
years after the last contribution or years after the last contribution or
withdrawal (other than fees, taxes or withdrawal (other than fees, taxes or
interest) and after the FHSA provider interest) and after the FHSA provider
has made reasonable efforts to has made reasonable efforts to contact
contact the FHSA holder. the FHSA holder.
Claimants are able to seek the return Claimants are able to seek the return
of unclaimed moneys at any time of unclaimed moneys at any time
through an appropriation by through an appropriation by
Parliament. This would include an Parliament. No interest is payable.
interest component.
FHSA providers are required to make No provision is for transition.
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.
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
12
Schedule 2 - First Home Saver Accounts
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.
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Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012
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.
14
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.
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Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012
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 Life insurance amounts become
unclaimed moneys three years after a unclaimed moneys seven years after a
policy matures. policy matures.
Claimants are able to seek the return Claimants are able to seek the return
of unclaimed moneys at any time of unclaimed moneys at any time
through an appropriation by through an appropriation by
Parliament. This would include an Parliament. No interest is payable.
interest component.
Life insurers are required to make a No provision is for transition.
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.
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
16
Schedule 2 - First Home Saver Accounts
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.
17
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.
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Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012
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.
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Schedule 4 - Superannuation
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 Small lost accounts with balances of
less than $2,000 are required to be less than $200 are required to be
transferred to the Commissioner. transferred to the Commissioner.
Accounts of unidentifiable members Accounts of unidentifiable members
that have been inactive for the last that have been inactive for the last
12 months are required to be five years are required to be
transferred to the Commissioner. transferred to the Commissioner.
Interest will accrue and be paid on all Interest is paid on unclaimed
unclaimed superannuation monies superannuation of former temporary
from 1 July 2013. residents who become an Australian
or New Zealand citizen or hold a
permanent resident visa.
Superannuation providers are The current legislative instrument
required to pay the balances of certain specifies a due date for payment of
lost member accounts to the certain lost member accounts of
Commissioner by 31 May 2013 for 30 April in the following year for the
the 31 December 2012 unclaimed 31 December unclaimed money day.
money day. This is a one-off change.
21
Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012
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
22
Schedule 4 - Superannuation
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)]
23
Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012
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.
24
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.
25
Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012
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 ASIC has responsibility for the
responsibility for the holding and holding and handling of unclaimed
handling of unclaimed property. In property. In the case of property that
the case of property that is not is not money, ASIC must sell or
money, ASIC must sell or dispose of dispose of the property as it sees fit.
the property as it sees fit. Unclaimed Unclaimed property, including
property, including moneys and moneys and proceeds from the sale or
proceeds from the sale or disposal of disposal of property, are held in
property, will be remitted directly to CUMSA for six years, after which
Commonwealth consolidated time any remaining moneys are
revenue. recognised in Commonwealth
consolidated revenue.
Claimants of unclaimed property Claimants of unclaimed property are
would continue to be able to seek the able to seek the return of an amount
return of an amount equal to the value equal to the value of their property at
of their property at any time, with the any time, with the moneys returned
moneys returned through an through CUMSA, or an appropriation
appropriation by Parliament. This by Parliament if the money has been
would include an interest transferred to Commonwealth
component. 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]
26
Schedule 5 - Corporations
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.
27
Chapter 6 Statement of Compatibility
with Human Rights
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
29
Index
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
31
Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012
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), 4.23
paragraph 20H(3)(b)
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, 5.7
Corporations Act, section 9
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
32
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