Is the Government really taking your money if you leave it sitting idle? Our CFO Greg Taylor explains the changes to legislation regarding inactive accounts.
There has been a bit of fuss in the media of late with some suggestions that the Government is taking your bank, credit union or building society account if you don’t use it.
The reality is that the Government has changed legislation so that if a bank account is inactive for more than three years it will be claimed by the Australian Securities and Investment Commission (ASIC). It used to be that accounts had to lay dormant for seven years before that happened. The change takes place from May 31.
Most of us, certainly in business, don’t have accounts sitting idle. But, accounts are sometimes forgotten and addresses aren’t updated. Surprisingly, Australians already have $677 million in unclaimed shares, life insurance and from accounts originally with banks, building societies and credit unions sitting with ASIC. Novocastrians own $5.7 million of this money.
There is also $17 billion worth of Super funds unclaimed and State governments also hold money from deceased estates and salaries and wages too.
It is important to note that if the money is yours, it is not lost to you. When it is sitting with ASIC it can be easier to claim. From July 1, 2013, funds sitting with ASIC will earn interest based on the inflation rate (Consumer Price Index). This interest is also tax exempt. This can better than the funds being eaten away by bank fees.
You or your employees can search for free to see if you have unclaimed or dormant accounts or super via ASIC’s Money Smart website. If there is a match to your name you then have to take the details ASIC provides and contact the financial institution or Super fund that held the funds initially.
If you do have business or personal accounts that have been sitting idle for more than three years then it is worth contacting your financial institution to check if you need to do anything.
At the Greater Building Society we are advising customers to always keep the address on their account current. We always try to contact our customers if their funds are at risk of being sent to ASIC. The majority of unclaimed accounts we deal with don't have current addresses.
This post is based on Greg's weekly business finance column that appeared in this week's Newcastle Post newspaper.