Inactive Bank account balances to transfer to Federal Government
Urgent: Action before 31 May 2013
The Government has introduced laws allowing the Australian Securities and Investments Commission (ASIC) to transfer money from bank accounts that have had no activity for three years. Banks and other authorised deposit taking institutions are required to submit to ASIC details of any bank accounts that have had no activity for the past three years by 31 May 2013. Under the new laws, ASIC are able to shift the account balances of inactive accounts to the Government. Some reports estimate this measure will net the Federal Government over $100 Million this year
Account holders will be able to reclaim monies from the Government, but this will no doubt be a time consuming process and small account balance holders may just ignore it.
We expect this may affect a variety of clients including those with small balance superannuation accounts from previous employers; family trusts that have deposited the $10 trust settled sum into a separate account, landlords that have accepted a 'security deposit over a lease and many individuals with inactive bank accounts.
To prevent this from occurring, bank account holders should review their accounts and ensure some activity takes place before 31 May 2013.
f you have small superannuation accounts, it may make sense to consolidate them with your main superannuation fund to reduce fees, consolidate capital etc. You should also consider the same approach for bank accounts with small balances. For accounts that need to remain open, a small deposit or withdrawal should be sufficient activity to prevent the Government from transferring your money. We understand that bank fees and interest are not counted as activities on the accounts, so some positive action is required by the account holder.
Account holders must take action before 31 May 2013 to prevent the Government from transferring these balances.
For a pdf version of this tax alert please click here