Tax Office to return money from inactive super accounts from Friday

It’s rare to get a cash injection without having to lift a finger – but that’s exactly what will be happening to millions of us within days.

Surprise cash payouts are about to land in the accounts of millions of Australians — and yours could be in line too.

From Friday, an estimated 2.6 million Australians could find a welcome gift from the Australian Taxation Office in their everyday bank account or their superannuation account.

It’s all thanks to some new changes to superannuation laws, designed to reunite people with their lost super.

In a nutshell, the changes mean people with inactive super accounts with balances of less than $6000 can now have that balance automatically transferred by the ATO into their active super account.

However, if the balance is less than $200, that sum will automatically be sent to their bank account — and if a person is aged over 65, the cash will be sent to their bank account regardless of the total.

The law change means people with multiple super accounts they may have forgotten about, such as those who have started new jobs who were automatically signed up to a default fund without realising it, will no longer lose out on their hard-earned money.

Association of Superannuation Funds of Australia deputy chief executive officer Glen McCrea said those who are set to receive a payment will receive a notification from the ATO once the cash has been paid, with most payments to be made by the end of November.

“From November 1 onwards, around 2.6 million Australians can look forward to an early Christmas present as the ATO reunites 1.6 million super accounts and a further one million bank accounts with lost super,” he said.

“It’s a fantastic opportunity to engage with any lost or unclaimed super that individual members may have — after all, it’s your money.

“Individuals will receive a notification when the ATO has paid their ATO-held super directly into a bank account — if they are 65 and over or the amount is less than $200 — or rolled over into an active super account.”

Money could start landing in your account within days. Picture: iStock

He said those who were eligible to receive the payment did not need to do anything to claim it, and that the money would include an interest component set to the consumer price index, rather than a market rate of interest.

“ASFA has long advocated the ATO reuniting amounts it holds in cases where it has details of an active account held by an individual. While individuals were always able to contact the ATO and claim their lost super, only a small proportion of accounts were reunited. Many individuals were not aware that they had lost super or did not know how to claim it,” Mr McCrea said.

“The ATO now has the power and duty to proactively reunite lost super with the individuals that own it without the need for any application to be made.

“The ATO holds some quite large super balances as a result of balances being transferred from funds in cases where the fund has determined they never will be in a position to pay out a benefit to the account holder because they have lost contact with them.”

Ms McCrea said the amount of money set to be transferred back into people’s accounts could vary from small amounts of “$40 or $50” up to “tens of thousands of dollars”.

An ATO spokeswoman told news.com.au ATO-held super would be paid out from Friday onwards.

“Where possible, we will notify people if we have made payments to them. We are encouraging people to ensure that their financial instructions details are up to date in ATO online that can be accessed via MyGov,” the spokeswoman said.

“We would like to point out that the direct payments are only part of the reuniting program. “The main to objective is to proactively reunite inactive low-balance accounts to a person’s active super account where the super amount is greater than $200 or where account belongs to an individual less than 65 years of age into an individual’s eligible active super account that is held by a super provider on their behalf.”

The move is the result of the Treasury Laws Amendment (Protecting Your Superannuation Package) Act 2019, which means super providers are now required to report and pay accounts with a balance of less than $6000 to the ATO.

As of June 30, the ATO held about five million accounts worth $3.9 billion.

For more information, visit the ATO website.

The news comes as the October 31 tax deadline looms, with Australians who have yet to file their latest tax return left with just two days to get their paperwork in order.

The punishment for overdue tax returns increases depending on just how late you are, with fines increasing by $210 for every 28-day period you’re overdue, up to a maximum of $1050.

If you’re worried about the deadline, there is a loophole. Taxpayers who lodge through a tax agent instead of going it alone can take advantage of concessional extended deadlines that allow their agent to lodge a form on their behalf up to May 15, 2020, without incurring any penalty.

However, you will need to register with your agent and ensure your name is on the books before October 31, even if the actual return is lodged at a later date.