Explanatory Memorandum
(Circulated by the authority of the Deputy Prime Minister and Treasurer, the Hon Wayne Swan MP)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, authorised deposit-taking institutions (ADIs) are required to report on and pay to the Commonwealth unclaimed moneys (Section 69, Banking Act).
1.3 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 includes amounts that meet either test.
1.4 Unclaimed moneys held in retirement savings accounts (RSAs) (within the meaning of the Retirement Savings Accounts Act 1997 ) and first home saver accounts (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).
1.5 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 the Australian Securities and Investments Commission (ASIC). These details can also be searched via the ASIC web site (Subsection 69(9), Banking Act).
1.6 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).
1.7 The new arrangements will reduce the period before an amount payable by an ADI is treated as unclaimed moneys to three years. They also allow for the payment of interest on unclaimed moneys by the Commonwealth from 1 July 2013, as determined by regulations.
Summary of new law
1.8 The new law amends the Banking 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.
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. |
Detailed explanation of new law
1.9 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)]
1.10 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)]
1.11 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)]
1.12 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)]
1.13 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(8)]
1.14 As a transitional measure, the Bill extends the deadline to 30 April 2013 for ADIs to report on, and transfer to the Commonwealth, unclaimed moneys as at 31 December 2012. [Schedule 1, item 8, section 69]
Application and transitional provisions
1.15 The amendments in this Chapter will commence the day after the Act receives the Royal Assent.
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
