Do you have an inactive bank account? If so you will risk having it confiscated by the Labor Government. 31 May is your deadline!
You are urged to transact on your account before 31 May 2013.
Increased government powers to seize money from inactive banks accounts will soon come into effect, after legislation was rushed through parliament last year.
From May 31, the federal government will have the power to transfer to its own coffers, all money from accounts that have not been used for the past three years.
Any bank account that holds more than $1 and has not had any deposits or withdrawals during this timeframe will be transferred to the Australian Securities and Investment Commission (ASIC).
It should also be noted that interest payments are not considered to be deposits. Similarly, bank fees and charges are not considered withdrawals for the purpose of defining if an account is inactive.
Based on current data, the government will net around $109 million this year alone. Every year from now on, accounts that are deemed to be inactive will be released to ASIC.
Why did the legislation change?
It may not have been widely know before, but the government has always had the power to seize the money from inactive bank accounts.
The legislative change has redefined the time frames for what is deemed to be an inactive account. Prior to the new laws set last year, a bank account had to be inactive for seven years before the funds were transferred to ASIC.
Who will be affected?
Any bank accounts you have lost track of may be affected – for example, old accounts relating to specific jobs you have moved on from that have been sitting dormant with only a few dollars in them.
Many people lose track of their accounts when they move address or, move overseas.
Other inactive accounts from share trading, trusts or long-term savings accounts may also be caught in the sweep. Bank accounts set up for personal savings, children’s education or inheritance may also make the new hit list, if they have not had regular deposits or withdrawals in recent years.
If you do have an account of this nature, the best thing to do is to make a small deposit or withdrawal now, so that the account is no longer deemed to be inactive come May 31.
How do I know if I have an inactive bank account?
Check all of your current bank accounts and ensure they have had recent transactions. If you think you have a missing bank account from a previous job or share trading that you no longer operate, look back through your financial records. At some stage you will have received paper copies of statements and other information.
The MoneySmart service from ASIC has a tool that can help you find your unclaimed money. You can search via your name or via a transaction number, if you have it.
Failing that, if you remember which bank, credit union, building society or other deposit-taking organisation you held an account with, contact them directly.
What can I do if my money is taken by mistake?
If, for some reason, your money is taken under this new law, you can apply to ASIC to have it returned.
However, it is likely that the process to reclaim funds will be a lengthy one. The best thing to do is to avoid being part of this process in the first place.
What to do now?
* Check all of your current accounts, with every institution and ensure that a recent deposit or withdrawal has occurred.
* If you suspect you have a lost account, contact the institution and reclaim it, then ensure it is active by making a deposit or withdrawal.
* If you cannot remember where a lost account may reside, use the ASIC tool to determine if it can be located.
* Search any previous financial print statements to ensure that you have located every account that has been held in your name.
See the article in the AFR here: Budget grab for inactive bank accounts.
