House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

Chapter 3 - Payment of unclaimed money to the Commissioner

Overview

3.1 Part3 of this Bill contains provisions which set out a procedure for dealing with unclaimed money in funds. [Clauses 11to20]

Purpose of the provisions

3.2 The purpose of the provisions is to provide:

•

the meaning of unclaimed money;

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obligations on superannuation providers to make reasonable efforts to ensure that members who have immediately payable benefits in an inactive account (or in cases of death, beneficiaries), receive their benefits;

•

requirements relating to the payment and provision of statements in respect of unclaimed money;

•

greater co-operation between Commonwealth, State and Territory unclaimed money registers; and

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a legislative framework for the operation of the Commonwealth unclaimed money register.

Explanation of the provisions

Object of Part

3.3 The object of Part3 of this Bill is to set out a procedure for dealing with unclaimed money in funds. [Clause 11]

General meaning of unclaimed money

3.4 An amount payable is treated as unclaimed money if:

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the member has reached eligibility age;

•

the superannuation provider determines that under the governing rules of the fund or by operation of law, a benefit (other than a pension or annuity) is immediately payable in respect of the member;

•

the superannuation provider has not received an amount in respect of the member (and, in the case of a defined benefits superannuation scheme, no benefit has accrued in respect of the member) for at least 2 years (eg. the account has been inactive for the last 2 years); and

•

after making reasonable efforts and after a reasonable period has elapsed (eg. a reasonable period may be necessary to resolve legal issues), the superannuation provider is unable to ensure that the member receives the benefit.

[Clause 12]

Superannuation provider to make reasonable efforts to ensure the member receives the benefit

3.5 If the member has reached eligibility age and has immediately payable benefits in an inactive account, the superannuation provider must make reasonable efforts to ensure that the member receives the benefits [subclause 13(1)]. The maximum penalty on conviction for failure to comply with this obligation is a fine of 100 penalty units [subclause 13(2)].

Meaning of unclaimed money deceased member

3.6 An amount payable is treated as unclaimed money if:

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the member has died;

•

the superannuation provider determines that under the governing rules of the fund or by operation of law, a benefit (other than a pension or annuity) is immediately payable in respect of the member;

•

the superannuation provider has not received an amount in respect of the member (and, in the case of a defined benefits superannuation scheme, no benefit has accrued in respect of the member) for at least 2 years; and

•

after making reasonable efforts and after a reasonable period has elapsed, the superannuation provider is unable to ensure that the benefit is received by the person who is entitled to receive the benefit.

[Clause 14]

Superannuation provider to make reasonable efforts to ensure the person receives the benefit

3.7 If the member has died, the account of the deceased has been inactive (ie. for a 2 year period before, after or spanning the death) and a person is entitled to a part or whole of the members account, the superannuation provider must make reasonable efforts to ensure that the person receives their entitlement [subclause 15(1)] . The maximum penalty on conviction for failure to comply with this obligation is a fine of 100 penalty units [subclause 15(2)] .

Payments and reporting of unclaimed money

Statement of unclaimed money

3.8 A superannuation provider must give to the Commissioner of Taxation (the Commissioner), an approved form of statement of all unclaimed money at the end of each half-year unless State or Territory unclaimed money legislation is applicable in which case the statement must be given instead to the State or Territory unclaimed money register. [subclauses 16(1) and 18(2)]

3.9 If between the end of the half-year and the day the statement is given to the Commissioner, the superannuation provider pays any unclaimed money to a person entitled to it, the statement must contain such particulars relating to the amounts paid as are required by the approved form. [subclause 16(2)]

3.10 An unclaimed money statement must be given to the Commissioner within 4 months of the end of each half-year:

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1November for the half-year ending 30June; and

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1May for the half-year ending 31December.

[subclause 16(3)]

3.11 The Commissioner may, in writing, extend the time to lodge the unclaimed money statement before, on or after the due date (ie.1Mayand 1November each year). [subclause 16(4)]

3.12 If the requirements in respect of unclaimed money statements to be given to the Commissioner apply to a superannuation provider and the provider has not complied with the requirements, the provider is liable to a fine of up to 100 penalty units. [subclause 16(5)]

3.13 A superannuation provider does not fail to comply with the requirement to report unclaimed money within the 4 month period if the Commissioner has extended the time to lodge the unclaimed money statement and the superannuation provider lodged the statement within the extended period. [subclause 16(6)]

Payment of unclaimed money to Commissioner

3.14 The superannuation provider must pay with the statement to the Commissioner, the outstanding amount of unclaimed money for the half-year. [subclause 17(1)]

3.15 The Commissioner must pay unclaimed money to a person if:

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unclaimed money has been paid to the Commissioner by a superannuation provider; and

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the Commissioner is satisfied that the superannuation provider who paid the unclaimed money to the Commissioner, would have paid the unclaimed money to the person.

[subclause 17(2)]

3.16 If a superannuation provider satisfies the Commissioner that an amount of unclaimed money paid by the superannuation provider to the Commissioner exceeds the correct amount due to the person concerned, the Commissioner must refund the excess amount collected, to the provider. [subclause 17(3)]

3.17 The superannuation provider is discharged from further liability in respect of the unclaimed money upon payment of the money to the Commissioner. [subclause 17(4)]

3.18 The Consolidated Revenue Fund is appropriated for the purposes of receipt and payment of unclaimed money. [subclause 17(5)]

3.19 A superannuation provider that does not comply with the requirements relating to the payment of unclaimed money to the Commissioner is liable to a fine of up to 100 penalty units. [subclause 17(6)]

Payment of unclaimed money to a State or Territory authority

3.20 If the unclaimed money legislation of a State or Territory satisfies the 2 requirements set out in subclauses18(4) and (5) of this Bill, the superannuation provider must report and pay the unclaimed money to the State or Territory unclaimed money register in accordance with that law (instead of the Commissioner). [subclauses 18(1),(2) and(3)]

3.21 The first requirement is that the unclaimed money legislation of the State or Territory has provisions with the following effects:

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a superannuation provider must prepare, at the end of each half-year, a statement, in an approved form by a State or Territory authority, of all unclaimed money that is held in the fund;

•

the statement must be given to a State or Territory authority before:

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1November for the half-year ending 30June; and

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1May for the half-year ending 31December;

•

when the unclaimed money statement is provided, the superannuation provider must pay to the State or Territory authority, the outstanding amount of unclaimed money for the half-year; and

•

the State or Territory authority must keep a register with the particulars of:

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the unclaimed money as paid by superannuation providers; and

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each member in respect of whom there is unclaimed money.

[subclause 18(4)]

3.22 The second requirement is that the unclaimed money legislation of the State or Territory has provisions which correspond to the following provisions of the Superannuation (Unclaimed Money and Lost Members) Act 1999 (the Act) and have the following effects:

[subclause 18(5)]

3.23 The superannuation provider is discharged from further liability in respect of the unclaimed money upon payment of the money to the State or Territory unclaimed money register. [subclause 18(6)]

Commonwealth unclaimed money register

Register of unclaimed money

3.24 The Commissioner must keep a register that has particulars of:

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unclaimed money paid by a superannuation provider to the Commissioner; and

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each member entitled to the unclaimed money.

[subclause 19(1)]

3.25 The register may also contain:

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other information given to the Commissioner that is of the type contained in the register (this will allow the register to be updated with other relevant information given to the Commissioner, for example, from members of the public);

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information originally contained in State and Territory unclaimed money registers and provided to the Commissioner by those registers; and

•

information relating to unclaimed money of members of regulated exempt public sector superannuation schemes.

[subclauses 19(2), (3), (4) and(5)]

Commissioner may provide information to State and Territory authorities

3.26 The Commissioner may give unclaimed money information to State or Territory unclaimed money registers for the purposes of the Act (eg. for the purpose of identifying multiple entries for a person on Commonwealth, State and Territory unclaimed money registers). [Clause 20]