Inactive low-balance accounts for unclaimed super

Identifying inactive low-balance accounts

An inactive and low balance account (ILBA) is a super fund account that meets all the following criteria:

• No amount has been received for 16 months.
• The account balance is less than $6,000.
• The account is not a defined benefit account.
• The member has not met a prescribed condition of release.
• Insurance is not being provided in the account.
• The fund is not a self-managed super fund (SMSF) or small APRA fund.

An account in an APRA regulated super fund will not be an ILBA if any of the following events occurred in the last 16 months for that account:

• The member has changed investment options.
• The member has made changes to insurance.
• The member has elected to maintain insurance.
• The member has made or changed a binding beneficiary nomination.
• The member has provided a written notice to the super fund that they are not a member of an ILBA. This notice is valid for 16 months.
• The member has made a contribution.

When to pay ATO

Funds must report and pay the balance of an account to the ATO if all the following apply:

• An account is an ILBA as at the end of an unclaimed money day.
• The account is held by the fund on behalf of the person.
• The account is still an ILBA at the time immediately before the earlier of the time the
  • payment is made
  • payment is due and payable.

If a payment must be made, the amount is due and payable at the end of the scheduled statement day for the unclaimed money day.

Apply the tests above to determine whether an account meets the definition of an ILBA.

Consider the tests at the product level within an account. That is, the tests apply at a product level and not at an aggregated account level that incorporates multiple products. A product for this purpose is a MySuper product or choice product as defined in the Superannuation Industry (Supervision) Act 1993.

We take a practical compliance approach to this issue. We will not review whether funds have applied the relevant tests at a product level to identify their ILBA.

Receiving an amount for a member

Whether you have received an amount in respect of a member depends on the type of payment.

An amount that could be received in respect of a member, so that the member's account is not inactive, includes:

• a super guarantee (SG) payment from an employer or another type of concessional contribution
• a personal after-tax contribution or other non-concessional contribution
• a downsizer contribution
• an amount rolled over from another fund or the ATO
• a government contribution amount.

Changes to insurance

An account will not be an ILBA if the member took positive action that resulted in a change to the insurance coverage under the fund. This includes:

• a cancellation of insurance but not where a change was declined or otherwise not actioned.
• if the member has made an election to maintain insurance on that account.

The following are not considered positive actions:

• cancellation of insurance due to your member not opting in for insurance
• if the member applied for insurance and that application was declined.

An insurance claim is also not a change in insurance coverage.

Binding beneficiary nominations

An account will not be an ILBA if the member made or amended a binding beneficiary nomination. It is a matter of fact as to whether a beneficiary nomination is binding on the trustee of a regulated super fund. Where the trustee can exercise discretion in terms of the nomination, the nomination will not be a binding beneficiary nomination under this provision.

If the nomination is not valid, it is not a binding beneficiary nomination for the purposes of determining if an account is an ILBA.

Statement on inactive low-balance accounts

For each unclaimed money day, you must give the ATO a statement in the approved form of information for each ILBA.

If at the end of the unclaimed money day there are no balances held in ILBA, the statement must say so. A fund that has no balances held in ILBA (no members to report), can report through Online services for business using the USM non-lodgment advice (NLA) template.

At unclaimed money day, accounts need to meet the criteria for ILBA. At the scheduled statement day, funds need to determine if those accounts still meet the criteria of being an ILBA and if they need to report to the ATO.

Accounts that do not meet the criteria at unclaimed money day are not in the pool to be determined at statement day. The balance at unclaimed money day, including credited earnings and fees debited on that day, is the balance that ILBA is worked out on:

• balance under $6,000 – is an ILBA and is required to be reported.
• balance over $6,000 – is not an ILBA and is not required to pay the balance to the ATO.

How to pay ILBA

To pay the ATO, for each ILBA:

• download and complete the USM non-lodgment advice (NLA) template
• lodge in Online services for business

Family law payment splits

If your member’s account is, or could in the future, be subject to a family law payment split, you should take into account only the member's entitlement to payment remaining after any reduction by that payment split. The amount of any reduction as a result of a payment split is referred to as the non-member spouse amount.

You must also pay the non-member spouse amount to us for the non-member spouse. This amount is due and payable at the end of the scheduled statement day for the unclaimed money day.