Unclaimed superannuation money protocol

Transcription

1 Unclaimed superannuation money protocol QC: Content revised: Yes Abstract revised: No Abstract: Guidance for super providers regarding super interests identified in the Superannuation (Unclaimed Money and Lost Members) Act 1999 (SUMLMA) that are required to be reported and paid to the Commissioner of Taxation. Purpose This information provides guidance to super providers in meeting their obligations under the Superannuation (Unclaimed Money and Lost Members) Act 1999 (SUMLMA) in relation to unclaimed superannuation money (USM) and the associated reporting obligations. This information: provides technical guidance and does not replace the law includes an explanation of various key terms contained in the law gives guidelines on practical administration and our perspective of industry best practice encourages consistent practices and application of the unclaimed super legislation across the super industry. This information does not have the force of law and is not binding. It was developed in collaboration with industry representatives to support compliance across the industry in meeting their obligations in relation to their member s unclaimed super. When acting on the guidance provided in this information, you should take into account your member's individual circumstances and decide whether your action is appropriate. In line with your obligations under subsection 52(2) of the Superannuation Industry (Supervision) Act 1993, exercise your powers in the best interests of your members. This information does not apply to super providers that are trustees of a state or territory public sector super scheme, where: the relevant state or territory has laws requiring the reporting and payment of USM to the state or territory government the state or territory public sector super scheme complies with relevant state or territory laws. Where a state or territory does not have laws requiring the reporting of USM to the state or territory government, the state or territory public sector super scheme is required to comply with the SUMLMA and this information. See also:

2 Types of unclaimed super Guiding principles for industry best practice 1. The best interests of the member should be of primary concern when applying the law and the guidelines within this information. Field Code Changed Deleted: Unclaimed superannuation provider's frequently asked questions 2. Super providers should always make reasonable attempts to contact the member to advise them of their entitlement to a super benefit before reporting it as USM. 3. Once the super provider has determined a member s benefit is USM, they should report and pay it to the ATO on the next scheduled statement date. Category USM general Legislative content The provisions outlining the USM regime are in Part 3 of the SUMLMA and the associated Superannuation (Unclaimed Money and Lost Members) Regulations 1999 (SUMLMR). The USM legislation sets out the process for dealing with USM held by regulated super funds and retirement savings accounts (RSAs). Part 3 of the SUMLMA requires a super provider to report to the Commissioner, by the scheduled statement day, details of amounts payable for each: member who has reached eligibility age (generally 65 years old), where the trustee has lost contact with that member non-member spouse who is entitled to a splittable payment, where the trustee cannot ensure payment to that person member who has died, where the trustee cannot ensure payment to the people entitled to the money. If the amount is determined to be USM, it must be paid to the Commissioner. Once an amount is paid by a super provider to the Commissioner, that amount can be paid to the member if they apply for it to the Commissioner or on the Commissioner s initiative. We have a responsibility to keep a register of USM, containing information received from super providers. As a general principle, super providers should attempt to contact the relevant person and advise them of their entitlement to a super benefit as soon as practical after: a member has reached eligibility age (generally 65 years old) a non-member spouse becomes entitled to a splittable payment a member has died and another person is entitled to the money.

3 Meaning of unclaimed money The law (members aged over 65 years old) Under subsection 12(1) of the SUMLMA, an amount payable to a member of a fund (includes both accumulation and pension members) is taken to be unclaimed money if all the following apply: a. the member has reached eligibility age b. the super provider has not received an amount in respect of the member (and, in the case of a defined benefits super scheme, no benefit has accrued in respect of the member) within the last two years c. after a five year period since the super provider last had contact with the member, the provider has been unable to contact the member again after making reasonable efforts. Eligibility age Under section 10(1) SUMLMA, eligibility age means: d. in the case of a man 65 years old (or another age if prescribed by the regulations) e. in the case of a woman 60 years old (or another age if prescribed by the regulations). However, for the purposes of USM we accept that eligibility age for both men and women is 65 years old under section 4A Eligibility age Superannuation (Unclaimed Money and Lost Members) Regulations 1999 (SUMLMR). Under section 10(2) SUMLMA, when determining whether a member of a fund has reached eligibility age: Deleted: Superannaution Deleted: Uncalimed f. If the super provider does not know whether the member's gender the member is taken to be a man g. If the super provider does not know the member s date of birth they may determine the member: i. attained a particular age on a particular date(if the super provider reasonably believes that to be the case) ii. turned 18 on the day they first became a member of the fund iii. turned 18 on the day the super provider first received an amount in respect of him or her iv. turned 18 at the start of their eligible service period.

4 Best practice ATO guidance Examples of 'received an amount' in respect of a member Whether a super provider has received an amount for a member depends on the type of payment. The following are examples of amounts considered as received in respect of members: contributions, including eligible spouse contributions employer contributions member contributions shortfall component as determined under the super guarantee legislation payments to the fund from the super holding accounts (SHA) special account government contributions. benefits that were rolled over (paid as a super lump sum within the super system) transferred (members' benefits paid out of, or received by, a regulated super fund or received from another regulated super fund otherwise than upon satisfaction by the member of a condition of release for all those benefits). The following examples are not considered as amounts received in respect of members: investment earnings received by the super provider as it is a return on a wide range of investments and does not relate to any specific member distributions to accounts by super providers due to investment returns and profitability because the earnings are received due to fund investments, not for the member an involuntary super account transfer does not restart the clock for example, if a member has reached eligibility age, has not been in contact with the fund for five years, and the fund has not received an amount in respect of the member within two years and their account is transferred to another fund (successor fund transfer), then their account should be paid to us as USM. The involuntary transfer is not deemed to be contact from the member. Meaning of contact Contact requires communication between two parties and can include:

5 a phone conversation Deleted: tele meeting in person member correspondence (written or electronic) verification provided electronically via the super provider s website for example, verifying or updating address, membership or investment details Deleted:, if a super provider makes a pension payment to a member s bank account and the payment is accepted by the bank indicates the bank account is open and belongs to that member. Communication with an authorised third party/representative is also deemed contact. Examples of authorised third party include: financial advisors/planners solicitors holders of powers of attorney. However, contact with third parties such as employers is not deemed as contact as they are not authorised to act on the member s behalf. Examples of communication not deemed to be contact include: leaving a message on a member s mobile or voic which is never returned by the member sending out an annual statement where the super provider is unable to verify the member actually received the statement. By law, super providers must make a reasonable effort to contact a member after five years have passed since the last contact with the member this should be done as soon as practicable after the end of the five-year period. However, it is prudent for super providers to attempt to contact their members more frequently. Super providers are required to maintain evidence of attempts to contact members. Super providers may decide the manner in which attempts to contact the member are recorded however, the record should include sufficient details to establish the time, manner and outcome of the attempt. Penalties may apply for failing to make reasonable efforts to contact a member. The law (splittable payments) Under subsection 12(2) of the SUMLMA, if the following conditions apply, the amount payable is taken to be unclaimed money: a) a payment split applies to a splittable payment in respect of an interest that a person has as a member of a fund b) as a result, the non-member spouse (or their legal personal representative if they have died) is entitled to be paid an amount

6 c) after making reasonable efforts and after a reasonable period has passed, the super provider is unable to ensure the non-member spouse or their legal personal representative receives the amount. Best practice ATO guidance Where a super interest is concerned, a payment split applies when either a: splittable payment becomes payable and the non-member spouse is entitled to be paid an amount splitting order applies. A splittable payment in respect of a super interest of a non-member spouse includes a payment to: the spouse another person for the benefit of the spouse the legal personal representative of the spouse, after the death of the spouse a reversionary beneficiary, after the death of the spouse the legal personal representative of a reversionary beneficiary covered by the previous point, after the death of the reversionary beneficiary. The term 'unable to ensure' does not mean a super provider needs to be 100% certain the non-member spouse or their legal personal representative will receive the amount. As with any processes involving money transactions, there is no 100% guarantee that it is the non-member spouse or their legal personal representative who receives the amount. However, we expect that super providers already have processes and procedures with acceptable risk factors in place in relation to paying out benefits. The law (deceased members) Under section 14 of the SUMLMA, an amount payable in respect of a member of a fund is taken to be unclaimed money if the following apply: h. the member has died i. the super provider determines that, under the governing rules of the fund or by operation of law, a benefit (other than a pension or annuity) is immediately payable in respect of the member j. the super provider has not received an amount in respect of the member (and, in the case of a defined benefits super scheme, no benefit has accrued in respect of the member) within the last two years k. after making reasonable efforts and after a reasonable period has passed, the super provider is unable to ensure the benefit is received by the person who is entitled to receive the benefit.

7 Best practice ATO guidance On being informed that a member has died, a super provider has an obligation to pay any resulting death benefits to the people entitled to them, in accordance with the governing rules of the provider and the law. In tracing those potentially entitled to the benefit after the member s death, normal fund procedures should be followed. Whether some or all of the member's money becomes unclaimed depends upon the facts of each case. For example, if all of the persons entitled to the money have been identified, but some cannot be contacted despite reasonable efforts (or the provider is unable to ensure the benefit will be received by the identified individual), the entitlements of each of these people will be USM. However, the remainder of the deceased s benefit can be paid to the other persons entitled to it. Concept of reasonable What is considered reasonable depends on the facts of each case and needs to be weighed with the costs and responsibilities of the trustees. Reasonable attempts/efforts The concept of reasonable is not defined in the SUMLMA or SMLMR, however these are some examples as part of our guidance: telephoning the member, or the person who established the account, using the last known telephone numbers writing to the member, or the person who established the account, asking for the necessary information sending the member, or the person who established the account, an asking for the necessary information in the case of new applicants, contacting them upon finding information missing from their applications (for example, name, date of birth, address) attempted contact using any details provided by the last known employer or intermediary however, if the super provider has reason to believe the details were no longer valid (for example, the member has been reported as a lost member for the last ten years and there have been no changes in the members details), this would not be considered reasonable the provider checking their own records to see if the member has other accounts with more current information checking the telephone directory for more current details on the member engaging a company like Australia Post to undertake database searches to provide more current details on the member

8 contacting the sponsoring employer (particularly where employer contributions are being made on a regular basis) contacting any listed intermediaries contacting the nominated beneficiaries listed on a binding death nomination. Example 1 According to the super provider s records, Jane Doe has just turned 65 years old and has an account balance of $1,000,000. No contributions have been received in the last three years and there has been no contact with the member for the last six years. The provider has sent annual statements to the member s address and none of the mail was returned unclaimed. The provider telephones Jane Doe, but the call is unanswered. Given the size of the account balance, this action alone would not be considered a reasonable effort. However, it would be considered reasonable effort if the provider attempts to: write to the member contact the member s employer search the telephone directory for more recent contact details check whether there are any other accounts for the member with different contact information. Example 2 A member s super account was transferred from a super provider to an eligible rollover fund (ERF). Information provided at the time of the transfer was limited to the member s name, address, date of birth and benefit details. According to the information held by the ERF, the member has turned 65 years old, but no contributions or contact has been made within the last five years (since the member joined the ERF). The member's account balance is $3,750. The ERF previously had mail returned from the address provided at the time of the transfer. The ERF uses an electronic directory to locate another address for the member however, mail is also returned from this address. Taking into account the factors listed above, this would be considered a reasonable effort by the ERF. Example 3

9 A member rolled the money in his account from Super Provider A to Super Provider B five years ago. Two months after he rolled the money over, Super Provider A distributed money to all account holders and the member s account received $1.25. It would normally be expected that Super Provider A would contact the member soon after the distribution to arrange a transfer out. However, in this case, Super Provider A did not do anything. The member is now 65 years old. Usually, the fund would be expected to attempt to contact the member using last known details. However, given the small balance, it would be reasonable to expect that any further action would be limited on the part of the super provider. Meaning of a reasonable period Using current community standards in regards to correspondence is deemed acceptable. For example, allowing 28 days for a response for correspondence within Australia. It is an offence for a super provider not to make reasonable efforts to ensure that a benefit is received by either the non-member spouse or his or her legal personal representative see Penalty for more information. In the case of the death of a member, determining a reasonable period may require consideration of: the period of time since the fund last had contact with the member, especially since the last time that beneficiary details were updated (refer to the paragraph below for the meaning of last had contact ) whether or not a trust estate is involved the likelihood of finding entitled persons such as dependants whether any potential beneficiaries may be overseas whether the super provider has knowledge of recent family circumstances. Meaning of last had contact for the purposes of USM Last had contact means communication between a super provider and a member, where there is some action on the part of the member establishing they received the communication. If it has been five years or more since the super provider had an interaction with the member, and the other requirements of the definition of USM have been met, the super provider must attempt to establish contact with the member again.

10 Where they are unable to establish contact, the member s account is to be paid to us as USM. Find out more: Lost Members Register protocol document. USM of former temporary residents The super benefit of a former resident becomes unclaimed because the person has departed Australia, but has not claimed their benefit from their super provider within a specified period of time. The law Under section 20C(1), the Commissioner must give a super provider for a fund a written notice if the Commissioner is satisfied: a. there are reasonable grounds for believing the person has a super interest in the fund b. the person is a former temporary resident. Former temporary resident is defined in section 20AA(1) as: a. the person i. held a temporary visa (except a visa prescribed in the regulations currently subclass 405 (Investor Retirement) and subclass 410 (Retirement) visas per Regulation 4B of the Superannuation (Unclaimed Money and Lost Members) Regulations 1999) that has ceased to be in effect ii. left Australia after starting to hold the visa (independent of whether their visa ceased to have effect before, when or after they left Australia) Reporting When a super provider receives a section 20C notice from the Commissioner identifying their member as a former temporary resident, they are required to report the USM to the Commissioner (using the approved form) by the next scheduled statement day. Response to the notice,, as well as payment where required, are due by 31 October and 30 April each year. Deleted: give a statement Deleted: Due date for statements Example 1 A super provider receives a section 20C notice from the Commissioner in respect of one of their members on 15 May The super provider must provide the Commissioner with the required information in the approved form and payment (if required) by 31 October 2016 the next scheduled statement day. Deleted: 2010 Deleted: 2010

11 However, if it is less than 28 days to the next scheduled statement day when the Commissioner gives the section 20C notice to the super provider, the super provider has until the following schedule statement day to provide the required information and payment. Example 2 A super provider receives a section 20C notice from the Commissioner in respect of one of their members on 10 October This is within 28 days of the next scheduled statement day (31 October 2016), so the super provider has until 30 April 2017 (the following scheduled statement day), to provide the required information and payment. Super providers are required to respond to the Commissioner even where: the person for whom the Commissioner has given the section 20C notice does not have a super interest in the fund the super provider is not required to pay an amount in respect of the person to the Commissioner. The Commissioner may defer the time for responding to the message, however the request for deferral must be in writing, clearly state the reasons for delay and include a proposal for an alternate date for lodging the information. The deferral, if granted by the Commissioner, will be in writing. Deleted: 2010 Deleted: 2010 Deleted: 2011 Deleted: give Deleted: a statement Deleted: for giving the statement Failing to lodge information by the schedule statement day and not obtaining a deferral from the Commissioner may result in a Penalty. Payment A super provider is responsible for paying super money (generally as a departing Australia super payment) to a former temporary resident if requested, unless the money has already been paid to the Commissioner. From that time, responsibility of payment to former temporary residents of their super interests rests with the Commissioner. Payment of super money of former temporary residents to the Commissioner is due and payable at the same time the response to the notice is due.. As with the response message, an application may be made to the Commissioner to defer the response to the notice. Such requests must be made in writing, outlining the reasons for the deferral and proposing an alternative date for responding to the notice and payment. When reporting the USM in response to a notice, the super provider must also calculate and pay the identified member s super interest where required. To do this, the super provider must calculate the amount to be paid and determine when the calculation will be done. Deleted: statement Deleted: to be lodged Deleted: lodgment Deleted: payment Deleted: As well as giving a statement to the Commissioner Timing of the calculation Super providers must calculate the member s super interest immediately before they pay the amount to the Commissioner.

12 The calculation time will be one of the following: immediately before the next scheduled statement day after the section 20C notice was given if it is less than 28 days to the next scheduled statement day when the Commissioner gives the section 20C notice to the super fund, immediately before the following scheduled statement day if the Commissioner has deferred or granted an extension for the super provider to make a payment, immediately before the deferred due date if the super provider pays or lodges before the next scheduled statement day, then immediately before the super provider pays or reports via the approved form if the super provider makes multiple reports or payments before the next scheduled statement day, immediately before the report or payment for the identified member included in that particular report or payment. Deleted: lodges Deleted: payments or lodgments Deleted: payment or lodgment Deleted: payment or lodgment. Example 1 A super provider receives a section 20C notice from the Commissioner in respect of one of their members on 10 October As this is within 28 days of the next scheduled statement day (31 October 2016), the super provider has until 30 April 2017 to provide the required information and make a payment. The super provider is required to calculate the member s interest immediately before payment to the Commissioner, which is due on or before 30 April Deleted: 2010 Deleted: 2010 Deleted: 2011 Deleted: 2011 Example 2 The circumstances are the same as the above example however, the super provider decides to lodge its report early on 1 February As a result, the super provider is required to calculate the member s interest immediately before 1 February Deleted: 2011 Deleted: 2011 Example 3 A super provider receives a section 20C notice in respect of 400 members in May They must report and pay (where applicable) by the next scheduled statement day 31 October Due to the time required to calculate the members benefits, they decide to process them over a period of time. The super provider reports their USM and makes a payment in June 2016, July 2016, August 2016 and September 2016 (100 members per statement). The super provider is required to calculate the member s interest before the reporting and payment of the message on which the member is included. Deleted: 2010 Deleted: 2010 Deleted: lodges a statement Deleted: 2010 Deleted: 2010 Deleted: 2010 Deleted: 2010 Deleted: or lodgment of the statement

13 How to calculate former temporary resident s super interest Once a super provider determines the time the former temporary resident s interest should be calculated, they should apply the following formula at that time: Starting amount amount to be paid to member = excess amount (payable to the Commissioner) The starting amount is the notional amount that would have been paid to the member at the calculation time if they could and had requested payment. The starting amount: does not include any previous payments to the member includes any interest or earnings which would normally be included is reduced by any fees or charges that would have been incurred if the member had asked for payment is reduced by any reduction to give effect to a payment split under Part VIIIB of the Family Law Act However, when working out the starting amount, the super provider must not notionally withhold the DASP tax that would otherwise apply. Example 1 A super provider has received a section 20C notice in respect of one of its members, Maria. The super provider has calculated the balance of Maria s interest at the calculation time is $18,955.00, to which $47 earnings is added. Normally, if Maria had asked for this to be paid out as a super lump sum, she would be charged an administration fee of $25. Her starting amount is: $18,955 + $47 $25 = $18,977 Amounts to be paid to the member need to be determined to reduce the starting amount: if the member has met a condition of release and requested an amount be paid to them, the starting amount is to be reduced by the amount to be paid if the member has died, the starting amount is reduced by the amount that has been, or is required to be, paid because of the member s death to an entitled beneficiary the starting amount is reduced by the amount that supports a super income stream an amount (if any) worked out under the Regulations. Example 2 As calculated above, Maria s starting amount is $18,977 however she applied to

14 the fund for a departing Australia superannuation payment of $18,977. The excess amount to be paid to the Commissioner is then worked out as: $18,977 (starting amount) $18,977 (amounts to be paid to member) = $0.00 As there is no excess amount, no payment is required to be paid to the Commissioner as USM of a former temporary resident however, you will still need to respond to the notice with a message. Example 3 A super provider has received a section 20C notice in respect of one of its members, Joshua. Deleted: a statement must still be lodged. The super provider calculates the balance of Joshua s interest at the calculation time is $300,000. However, prior to leaving Australia, Joshua met the permanent incapacity condition of release and subsequently started an account-based income stream. The amount that supports Joshua s income stream is $150,000 as a result, the excess amount to be paid to the Commissioner is worked out as: $300,000 (starting amount) $150,000 (amounts to be paid to member) = $150,000. The super provider must not withhold any tax from the amount paid to the Commissioner. Correcting errors Revoking a notice A section 20C notice must be revoked by the Commissioner where: the section 20C notice should never have been given in respect of a person (because the circumstances for the giving of the notice never existed in the first place) the circumstances relating to the person have changed since the time the section 20C notice was given (the circumstances for giving the notice no longer exist). For example, the: super provider never held a super interest for the person person never held a temporary visa person held a temporary visa, but has not left Australia person is an Australian or New Zealand citizen person is the holder of a current temporary or permanent visa, or has applied for a permanent visa

15 person held a visa prescribed by the Regulations (Regulation 4B of the SUMLMR currently prescribe subclass 405 (Investor Retirement) and subclass 410 (Retirement) visas). If a super provider receives a section 20C notice for a member they believe should not have been given a notice, or where they know the member's circumstances have changed, they can request in writing (and include any relevant documentation) that the Commissioner revoke the notice.it is not expected that a super provider should undertake extensive tests to verify whether a section 20C notice should have been issued, particularly where some of this information (such as citizenship) would not generally be available to the provider. Deleted: However, if a super provider is in contact with the member and such information comes to light, or the provider s records show the account is still receiving contributions, the ATO will work with the provider to determine whether a section 20C notice should have been issued. The Commissioner is required to revoke a section 20C notice if satisfied that: there were no, or there is no longer, reasonable grounds for believing the person has a super interest in the fund the person never met, or no longer meets, the definition of former temporary resident. To do this, the Commissioner will issue a written revocation notice (under section 20J of the SUMLMA) that revokes the original section 20C notice. Once the original section 20C notice is revoked, it is taken to have never been given as a result, the super provider no longer has any requirement to respond to the notice or pay an amount in respect of the person to the Commissioner. However, if the provider wants to respond to the notice it can be done using the relevant error code A revocation notice will have no effect (will not revoke the original section 20C notice) if: Deleted: provide a statement or Deleted: SUPER.GEN.GEN.RLVR.6. Deleted: However, a Deleted: before the Commissioner revokes the original section 20C notice, the super provider made a payment to the Commissioner because of the original notice the notice of revocation is given to the super provider less than 28 days before the provider is required to give a statement to the Commissioner (including deferred dates) and before the end of that day the super provider gives a statement and/or makes payment (where required) because of the original section 20C notice. This second condition exists to allow super providers who have already started the process of responding to the Commissioner s original section 20C notice to ignore the revocation notice and continue with their processing. Where it is apparent that a revocation will have no effect (because the super provider has given a statement or made a payment) the Commissioner is not required to revoke the original section 20C notice. Example 1 A super provider receives a section 20C notice in respect of one of its members on

16 15 March 2018, advising that they are a former temporary resident. However, the super provider is aware the member has not left Australia and continues to receive both employer and personal contributions on a monthly basis. The super provider writes to the ATO on 20 March 2018 requesting the notice be revoked. On 15 April 2018, the super fund receives the revocation notice. As this is within 28 days of the scheduled statement day (30 April 2018,) if the super provider has already started the process to report and pay an amount because of the original section 20C notice (and the provider does lodge and pay by the due date of 30 April 2018), the revocation will have no effect. However, if the super provider has not started the process to report and pay, or chooses not to report the member the original section 20C notice is revoked and the super provider is no longer required to report the member or make payment (in respect of this person) to the Commissioner on the scheduled statement day 30 April Example 2 A super provider receives a section 20C notice in respect of one of its members on 15 April 2018, advising they are a former temporary resident. The super provider reports the member and makes a payment by the next scheduled statement day. However, the super provider becomes aware that the member has dual citizenship with Britain and New Zealand. They write to the ATO requesting the notice be revoked, because the member is a New Zealand citizen. At this point, the provider has already reported the member and made a payment, so any revocation would have no effect. As a result, the Commissioner is not required to revoke the notice. Deleted: September Deleted: 1 Deleted: September Deleted: 1 Deleted: October Deleted: 1 Deleted: 1 October Deleted: 1 Deleted: 1 Deleted: October Deleted: 1 Deleted: to remove Deleted: from the statement being prepared Deleted: provide Deleted: with a statement or make payment (in respect of this person) Deleted: 1 Deleted: October Deleted: 1 Deleted: September Deleted: 1 Deleted: lodges a statement Deleted: ( Deleted: ) Deleted: lodged a statement Deleted: in respect of the member The provider may still seek refund of the overpayment, provided there is no request from the member in question for the Commissioner to direct the amount elsewhere (for example, a direction to pay the amount to the member or to another super provider). Requesting a refund of an overpayment Where a super provider has paid an amount because of a notice given by the Commissioner under section 20C of the SUMLMA but the amount should not have been paid, or the amount paid was greater than it should have been, the Commissioner is required to refund that amount to the super provider. Examples of where an overpayment may occur include: an error was made in the calculation of the member s interest and too much was paid to the Commissioner due to an error, an incorrect person s interest (that is, the interest of a person who was not identified in the section 20C notice) was paid to the Commissioner

17 the person s interest was paid to the Commissioner, but it is later determined that the person does not meet the definition of a former temporary resident, where the person has not approached the ATO directly for payment. If the super provider becomes aware of an overpayment to the Commissioner because the super provider later forms the belief that the section 20C notice was incorrect, the super provider should supercrt@ato.gov.au with the following information: provider name provider Australian business number (ABN) member s name Deleted: your Deleted: your Deleted: Temporary Resident Notification Number Formatted: No bullets or numbering member s date of birth details about why the section 20C notice may have been incorrect (for example, dates of recent contributions). We will assist the super provider by confirming whether the section 20C notice was incorrect. Alternatively, the member may approach us directly to request a payment or rollover of the benefit. Where the section 20C notice was incorrect, or where the super provider made a calculation error, the super provider must request an adjustment. This can be done by lodging the adjustment template.. Where a section 20C notice was incorrect, the original message should be cancelled. Where an error was made in calculation, a decrease adjustment should be requested. A refund of the overpayment can be requested. Lost member accounts for USM Deleted: lodge an USM statement with the member s details and a member status of E Error Deleted: Deleted: the amount reported should be nil. Deleted: the correct amount should be reported. Deleted: This will trigger a refund of the overpayment from us to the super provider. Meaning of 'lost member account' Under section 22 of the SUMLMA, a member of a fund is a lost member at a particular time if the member is, at that time either a: a. lost RSA holder within the meaning of regulation 1.06 of the Retirement Savings Accounts Regulations 1997 (RSA Regulations) b. lost member within the meaning of regulation 1.03A of the Superannuation Industry (Supervision) Regulations (SIS Regulations). The SIS Regulations define a member of a super provider to be a lost member at a particular time if any of the following apply:

18 the member is uncontactable the member is an inactive member the member joined the fund from another super provider as a lost member, unless either within the last two years of the member's membership, the super provider verified the member's address is correct and has no reason to believe the address is now incorrect the member is permanently excluded from being a lost member because either o o o the member is an inactive member who indicated by a positive act they wish to continue to be a member of the fund the member contacted the super provider at any time after they joined the fund and indicated they wished to continue being a member of the fund the member is a member of a self-managed super fund (SMSF). A key underlying concept is that it is the member that is lost not the account. See also: Lost Members Register protocol document General principles The provisions governing the payment to the Commissioner of certain accounts relating to lost members are contained within Part 4A of the SUMLMA. If a super provider has accounts that meet the definition of a lost member account (balance of small accounts and inactive accounts of unidentifiable members) at the end of an unclaimed money day, the super provider must provide the Commissioner with a statement and make a payment (where applicable) by the corresponding scheduled statement day. Upon receipt of an application by a person the lost member account belongs to, or on the Commissioner s own initiative, the Commissioner must pay the money either to: a complying super fund that person one or more of that person's beneficiaries or the legal personal representative (in the event of their death). Categories of USM lost member accounts Super providers must report and pay to the Commissioner amounts that meet the following definitions of 'lost member accounts'.

19 Test 1 small lost member account Under subsection 24B(1), an account in a fund is taken to be a lost member account if all the following apply: a. the member on whose behalf the account is held is a lost member b. the balance of the account (on the unclaimed money day) is less than $6,000 c. the account does not support or relate to a defined benefit interest (within the meaning of section of the Income Tax Assessment Act 1997). Test 2 inactive account of an unidentifiable member (insoluble lost member account) Under subsection 24B(2), an account in a fund is also taken to be a lost member account if all the following apply: a. the member on whose behalf the account is held is a lost member b. the super provider has not received an amount in respect of the member within the last 12 months c. the super provider is satisfied it will not be possiblefor them, considering the information reasonably available to them, to pay an amount to the member Deleted: d. the account does not support or relate to a defined benefit interest (within the meaning of section of the Income Tax Assessment Act 1997). Lost member account test 1 At the end of an unclaimed money day, a super provider must identify any accounts that belong to lost members (as defined by the relevant regulations) where the balance is less than $6,000. The balance at this time should not reflect any amounts yet to be credited or debited from the account the super provider is not required to add interest or deduct fees to determine whether the account is a lost member account. Accounts below $6,000 that belong to lost members, which do not support or relate to a defined benefit interest, will meet lost member account test 1. The super provider must provide information relating to the account to the Commissioner on the scheduled statement day. Example balance over $6,000 on scheduled statement day A super provider identifies a member that meets the definition of 'lost member' has an account balance of $5,999 on the unclaimed money day, 31 December as such, it is a lost member account. Before the corresponding scheduled statement day, 30 April, the superannuation account is credited with interest of $3.50, bringing the account balance to $6, However, as the value of the account was below $6,000 on the unclaimed money

20 day, the account must still be reported and paid to us. Example balance under $6,000 on scheduled statement day A super provider identifies a member that meets the definition of 'lost' has an account balance of $6,010 on the unclaimed money day, 31 December. Although the member remains a 'lost member', the account does not meet the definition of a small lost member account. Before the corresponding scheduled statement day (30 April), the account is debited with charges of $13.50, bringing the account balance to $5, However, as the value of the account was over $6,000 on the unclaimed money day, the account is not required to be reported or paid. If the account value remains under $6,000 at the next unclaimed money day (31 October), then it may meet the definition of a small lost member account. Example account under $6,000 and member is inactive Poppy has $5,400 in her super account with a fund that has her correct contact information. She joined the fund as a standard employer-sponsored member seven years ago. She has not received any contributions or rollovers to her account for the last five years. Poppy is a lost inactive member with a small balance, so the fund must report and pay the balance to us on the next reporting date as a small lost member account. Example member with multiple accounts on scheduled statement day Simon is a lost member and has two lost super accounts with the same fund account 1 has a balance of $5,500 and account 2 has $6,800. Although the combined value of both accounts is over $6,000, the super provider is required to report and pay account 1 as a lost member account to us, as the value of that account was below $6,000 on the unclaimed money day. The fund must report and pay the amount to us on the next reporting date as a small lost member account. Example account under $6,000 and member is uncontactable Jack has a super account with a small balance of $1,900. The fund has an address for him and has had two separate pieces of mail returned unclaimed. The fund has not received a contribution for Jack in the last 16 months and he has not engaged with the fund. Jack is a lost member because he is uncontactable and has not had a contribution or rollover within 12 months.

21 On the next USM scheduled statement date, the fund must report and pay the balance to us as a small lost member account. Lost member account test 2 At the end of an unclaimed money day, a super provider must identify any accounts belonging to lost members (as defined by the relevant regulations), and where the super provider has not received an amount in respect of the member within the last 12 months. For example: contributions, such as employer or personal contributions) rollovers transfers. These amounts do not include interest or earnings that may be credited to the account by the super provider. Example A super provider holds an account for a lost member at 30 June The last employer contribution credited to the account was on 15 March Deleted: 2012 Deleted: 2011 No personal contributions, rollover or transfers were ever received. The super provider also credited earnings every six months. For the purposes of test 2, the super provider has not received an amount in respect of the member within the last 12 months. The condition relating to the member s unidentified status is that the super provider must be satisfied that, considering the information reasonably available to them, they would be unable to pay an amount to the member at any time in the future. That is, at the time the test is applied, and based on the information the super provider holds, if a person attempted to claim ownership, the super provider could not be confident of verifying ownership. Although the SUMLMA states the decision is to be made on any information reasonably available to the super provider, it is expected a super provider will, if they have not already done so, follow up any information that could be made available to them at this time. This allows the super provider to make a reasonable assessment of whether the amount will meet the definition of an insoluble lost member account. For example, if an amount would potentially meet the definition of an insoluble lost member account, but the super provider believes it may be able to obtain further identity information about the member from the employer who contributed on their behalf, it would be expected the super provider contact (or attempt to contact) the employer. In this situation, it is expected the super provider contact the employer to gain any additional information.

22 The decision as to whether they meet the insoluble lost member account test is to be made on information reasonably available at that time not on information that may become available in the future. The term reasonable is not defined within the SUMLMA and must be determined in the context of the information held by the super provider in a particular circumstance. However, as a general guide, the super provider must hold a minimum of two complete pieces of quality information about the member to enable them to determine and verify the identity of the person whose account they hold. Example An account was opened with the super provider for John Smith in June No further information was provided, and contributions ceased in July No records exist to specify who made the contributions. Attempts by the super provider to locate the member were unsuccessful. As the super provider has only one piece of complete information, it determines this would not be sufficient for them to establish the member s ownership of the account, even if the member were to approach the super provider. The account is identified as an insoluble lost member account for the purposes of the lost member account provisions. Example Joseph is a lost member and has a super account has a balance of $7,500. No contributions or rollovers have been received within the last twelve months. Joseph s super fund does not have his date of birth, TFN or details of his employer. Based on this lack of information about Joseph, the fund does not think it will ever be possible to pay him. The fund must report and pay the balance to us on the next reporting date as an insoluble lost member account. Even where the super provider holds two (or more) complete pieces of information, super providers should still assess this information in terms of quality and whether it would truly allow them to correctly establish the identity of the account s owner. Example A super provider holds an account belonging to a lost member, John Brown. No contributions or rollovers have been received for over 12 months. The super provider has the member s name and date of birth however, on reviewing this information, the date of birth is recorded as 1 January As this date of birth is clearly not correct and the only other piece of information the super provider holds is the member s name, which is a relatively common name, this would generally not be sufficient for the super fund to establish the member s ownership of the account.

23 Example A super provider holds an account belonging to a lost member, Homer Simpson. No contributions or rollovers have been received for over 12 months. The super provider has the following information: Name: Homer Jay Simpson Address: 742 Evergreen Terrace, Springfield Employer: Springfield Nuclear Power plant Though the super provider has three pieces of information, the quality of this information, in terms of identifying the member, may not be sufficient as it mimics details from a popular television program. The super provider does not believe the information will assist them in paying the account to the person to whom it belongs instead, they pay it to us as an insoluble lost member account. Ultimately, the decision about whether a super provider holds sufficient information to determine the account ownership is up to each individual super provider. However, to give some guidance and to assist with consistency, the following examples provide some general ideas about the level of information that would not be considered reasonable to establish an account's ownership. Examples where information would generally not be sufficient to establish account ownership: John Smith only one piece of information Julie, 15 June 1964 two pieces of information, but one is incomplete David Black, contributions made by Coles two pieces of information, but one is incomplete due to the size of the employer this may not be enough to establish ownership Judy McDonald, Whoop Whoop Road, Outback two pieces of information, but due to the vagueness of the address this may not be enough to establish ownership. Unlike the USM provisions, the lost member accounts provisions do not impose any additional obligation to contact or locate the member at the time of applying the tests. However, this does not absolve the super provider from their general fiduciary duty or trustee responsibilities in attempting to locate the member and gaining additional information throughout the time they are the holder of the account particularly where this may prevent the member from becoming a lost member.