As of May this year any bank account which has not seen activity for three years can be transferred into the Government’s hands. Previously the account had to have been inactive for seven years, but the Federal Government rushed the legislation amendment through late last year in a bid to raise $109 million this financial year (it is unclear how they have arrived at this figure).
All authorised deposit taking institutions will have to submit a report on unclaimed money to the Australian Securities and Investments Commission (ASIC) for accounts which have been inactive for seven years by 31 March, and for three years by 31 May. These accounts will then be transferred to the Commonwealth via ASIC.
Accounts which are most likely to be affected are those which contain the bond for a rental property with a lease of longer than three years, savings accounts into which you are no longer making deposits, unclaimed superannuation, life insurance and trust funds. Hundreds of thousands of Australians own accounts which could be transferred to the Government under the amended legislation.
Banks are urging customers to make transactions on these accounts – adding or subtracting just $1 is enough to protect the account from ASIC. Interest payments, fees and charges are not considered transactions and will not prevent the balance of your account from being claimed.
The Government will continue to pay interest on all accounts claimed, so that their value remains the same. If your account is claimed and you discover it at a later date, you can reclaim the money if you can prove it is yours by filling out a form and writing to ASIC.
I’m no politician, but even I know that taking people’s money is a stupid way to win an election. The Government did not consult the Australian Bankers Association (ABA) about the new three-year time limit – the figure appears to be an arbitrary one. Even as a Labor supporter, I am struggling to see this as anything but a desperate grab for money by a government which can’t live up to its (retracted) budget surplus promises.
If this was just about money which had been lost, such as superannuation accounts where the owner cannot be contacted, then I could understand (even condone) the action. But many of the accounts which are likely to be transferred belong to people who just haven’t realised their savings are about to be taken. The bank knows who that money belongs to and the Government knows who that money belongs to, so as far as I’m concerned it’s stealing.
Imagine you have been saving for a big purchase, perhaps a holiday. While you were working you were adding money to the account, but since you cut back you have simply been letting the interest accrue. Three years later you are ready to book your tickets, but when you go to pay for them you discover that your account has been transferrerd to the Commonwealth. You then have to spend months trying to reclaim your own money before you can even think about planning your trip.
Three years is, in my opinion, not long enough to call an account ‘unclaimed’ and I urge all of you to ensure you make at least one transaction on each of your accounts before March 31.
What do you think? Is this a practical way to use money which is just lying around, or has the Government crossed the line in its attempt to raise revenue?