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730,000 ‘unclaimed’ super accounts seized by ATO

THE federal government has booked a massive $740 million windfall after seizing control of 730,000 “unclaimed” superannuation accounts.

The Australian Taxation Office took control of $1.2 billion of super funds in the year to June – up from $141m the year before – under budget-boosting laws brought in under Labor late last year.

Those super funds whose owners could not be found, such as those who had changed address and not told their fund, were deemed to be “inactive” after just 12 months under new laws, down from five years previously.

The former government also increased the dollar value of “small” unclaimed funds to be handed over to the ATO from $200 to $2000 under the moves, which has fuelled the massive gain to government coffers.

As revealed by The Australian yesterday, the federal government appropriated $640m of Australians’ bank balances and life insurance policies in 2012-13 under those laws, up from just $108m the year earlier.

Under the super changes, the ATO has estimated it will repay $451m of the $1.2bn it had collected to owners, booking unclaimed super “revenue” of $740m on the remainder.

The ATO holds a total of $2.086bn in unclaimed super, up from $897m in the 2011-12 financial year, according to its full-year accounts.

Members of the super industry have raised serious concerns with the laws, which the Abbott government says it will not repeal, saying that in claiming the funds as its own, the government has a vested interest in not finding owners.

Association of Superannuation Funds of Australia chief executive Pauline Vamos said superannuation funds had an ongoing obligation to find account holders, and under no circumstances were able to claim funds as their own. Unlike super funds, however, the ATO makes an estimate of the amount of money that will be claimed, and hands the rest to consolidated revenue.

Australian Institute of Superannuation Trustees chief executive Tom Garcia said the ATO was “yet to provide any details” on how effective it had been in returning members’ super since the threshold was raised to $2000. Financial Services Council chief executive John Brogden was highly critical of the government “raiding” people’s revenue.

“Governments should be consolidating people’s superannuation, not putting it into consolidated revenue,” Mr Brogden said.

The former government in August announced it would increase the threshold for inactive accounts from $2000 to $4000 by December 2015 and to $6000 the following year.

Mr Brogden said the move was opposed by the FSC and “unacceptable”.

A spokesman for Joe Hockey yesterday said the changes were “enshrined in law” and the government would not be reversing them.

In December last year, the ALP also separately ruled that any bank accounts untouched for three years were “inactive” and had to be given to authorities. Under the laws, a fund was deemed “inactive” if no deposits or withdrawals were made in 12 months.

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