The ATO isn't known for handing out money but there will soon be an exception with the tax office giving Australians some money back from inactive low-balance super accounts. Here's what you need to know.
Why's the ATO giving me money right now?
Thanks to a new law being passed, the ATO is now proactively looking at inactive low-balance super accounts and consolidating them on your behalf. The new law, Treasury Laws Amendment (Protecting Your Superannuation Package) Act 2019, means those with inactive super balances under the amount of $6000 will have those balances, if eligible, transferred to an active super account.
But if the amount is under $200, those amounts will be sent straight to your elected bank account and it's not subject to tax.
"The direct payment of ATO-held amount of less than $200 has no tax withheld and is not subject to tax, therefore you do not need to include this amount in your tax return," the ATO's site reads.
If you're a person aged 65 and over, any amounts from inactive low-balance super accounts will be sent directly to your bank account no matter the total.
How will it happen?
First, you'll need an eligible account, which might've happened from any short-term employment you've had over your working life. When you start a new job, you'll be given the option to use the super company your employer uses or provide details of your own, the convenience of using the one already pre-filled means many have their super funds strewn across multiple accounts, which are forgotten about long after you leave your job.
The ATO deems a low-balance super account as inactive specifically if:
- No amount has been received by your fund for crediting to that account for your benefit within the last 16 months.
- The account balance is less than $6000.
- You have not met a prescribed condition of release.
- The account is not a defined benefit account.
- There is no insurance on the account.
- The account is not held in a self-managed super fund (SMSF) or small Australian Prudential Regulation Authority (APRA) fund.
The ATO explains you don't need to do anything to have the funds transferred to your active super account or bank account, it'll just happen automatically and you'll be notified where possible.
When do I get my money?
It's up to the funds to report inactive low-balance accounts to the ATO by certain dates and then transfer the money to them. According to the ATO, if your inactive account was identified on 30 June 2019, you will be paid out or your sum will be transferred from Friday 31 October. If it's done by 31 December 2019, then you'll have to wait until 30 April 2020.
Whether you receive a tiny cash bonus or those thousands are transferred to your primary super account, it's a win for Australians losing money to a system that's supposed to be helping it grow.
Another tax year has come and gone, and most of us have already filed out returns. (You slow coaches out there have until 31 October.) Ideally, all that admin effort should have been rewarded with a nice little sum. But only if you remembered to claim the expenses you're entitled to.