ATO auto consolidation of super
DID YOU KNOW?
As part of the Protecting Your Super measures, the ATO has begun proactively consolidating inactive low-balance accounts and ATO-held unclaimed super money to an individual’s active account.
The first period of consolidations is scheduled from 1 November to 31 December 2019. The ATO may consolidate money they hold on behalf of a member with an active super account, if the consolidated balance would be $6,000 or more.
ATO HELD SUPER
Amendments were made to the law in March 2019, giving the ATO greater powers to consolidate amounts that have been paid to the ATO, without needing direction from the member. The ATO now has the power to transfer the following amounts to an active superannuation account of the member:
unclaimed money (members 65 years or older, non-member spouse, deceased member)
inactive low balance accounts
lost member accounts
More detail on ATO held super is available on the ATO website here. The new rules also apply to amounts paid to the ATO before the auto-consolidation measures commenced.
PRIORITY OF ATO TRANSFERS
There are existing measures that require the ATO to pay out certain amounts of ATO held super, which take priority over the new auto-consolidation measures. For this reason, the ATO will only proactively initiate transfers of inactive low balance accounts and lost members accounts where:
the person has not made a request to transfer ATO-held super to a preferred super fund; and
the person is aged less than 65 years; and
the amount of ATO-held super is $200 or more.
The ATO will actively make a direct payment to an individual of their ATO-held super where the amount is less than $200 or the individual is aged 65 years or over. Where possible, the individual will be notified if the ATO makes a direct payment.The direct payment of ATO-held amounts of less than $200 have no tax withheld and are not subject to tax, therefore individuals do not need to include these amounts in their tax return.
For unclaimed money, existing measures require the ATO to transfer the amount to a preferred superannuation fund at the members request or pay directly to the member where possible. Where this is not possible the auto-consolidation rules apply.
Under the auto-consolidation measures, the ATO must rollover ATO-held amounts of inactive low-balance accounts, unclaimed super money and lost member accounts to a superannuation account for a member where:
the member has an active super account – ie. one that has received an amount in the previous financial year or current financial year eg. contributions or rollovers.
the fund to receive the transfer will accept amounts from the ATO; and
the balance of the account, once the ATO has made the transfer is greater than $6,000.
The ATO has also confirmed that “received an amount” includes amounts the fund received from the ATO including rollovers of unclaimed super money, Government super contributions or SHA transfers.
In regard to account balances, the ATO has confirmed that while they will consider all available information at the time of transfer, they may not have up-to-date information. For example, the balance of the account may have altered since it was last reported to the ATO. A transfer by the ATO will be taken to have been made correctly if the ATO’s most recent information was used at the time of the payment. The ATO has stated that it will use the annual account balance reported to them via the Member Account Transaction Service (MATS) for the 2018-19 year and the MCS reporting for the 2017-18 year (where 2019 information is not available).
If the ATO makes a payment of amounts of unclaimed super money, inactive low-balance accounts or lost member accounts, including via auto-consolidation, they must also pay interest to the fund based on CPI. Interest does not accrue in relation to a period before 1 July 2013.
If a member has more than one eligible active account, the regulations prescribe the way the ATO selects the active account to which to send payments. The order of priority is:
An eligible account that most recently received an unclaimed money payment from the ATO
An eligible account that most recently received an amount in the current or previous financial year
An eligible account that holds the largest balance
An eligible account determined by the ATO
HOW ARE MULTIPLE AMOUNTS TRANSFERRED?
The ATO has confirmed that where they transfer multiple amounts of unclaimed super money, inactive low-balance accounts and lost member accounts, the active fund will receive a single payment of the combined amounts. However each payment will retain its original eligible service period start date and tax components. This is possible as the underlying data for the individual underlying payments can be sent in a single SuperStream message.
MEMBER INITIATED REQUESTS
Payments of unclaimed money, inactive low balance accounts and lost member accounts may also be initiated by a person online via myGov9 rather than wait to have the amounts automatically transferred by the ATO.
The ATO must pay auto-consolidation amounts to the fund within 28 days after it is satisfied it is possible to pay the amount to an active super account.