You will find the provisions governing the payment to ATO of lost member accounts in Part 4A of the Superannuation (Unclaimed Money and Lost Members) Act 1999 (SUMLMA).
Under section 8 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:
- lost member within the meaning of regulation 1.03A of the Superannuation Industry (Supervision) Regulations (SISR), or
- lost RSA holder within the meaning of regulation 1.06 of the Retirement Savings Accounts Regulations 1997 (RSA Regulations).
These regulations define a member to be a lost member at a particular time if:
- they are uncontactable
- they are an inactive member, or
- for funds only, the member joined the fund from another super provider as a lost member.
- within the last two years of the member's membership you verified the member's address is correct and have no reason to believe the address is now incorrect, or
- the member is permanently excluded from being a lost member because
- they are an inactive member who indicated by a positive act they wish to continue to be a member of the fund
- they contacted you at any time after they joined the fund and indicated they wished to continue being a member of the fund, or
- they are 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.
The money held for the lost member remains with you, unless it meets the definition of a lost member account (small accounts and insoluble lost member) at the end of an unclaimed money day. You must then provide the ATO with a statement and make a payment by the corresponding scheduled statement day.
Upon receipt of an application by a person the lost member account belongs to, or on the ATO’s own initiative, we must pay the money to:
- a complying super fund
- the member (if a condition of release is met)
- the beneficiaries or the legal personal representative (in the event of their death).
You must report and pay to the ATO amounts that meet the following definition of lost member account – small account.
Under subsection 24B(1) of the SUMLMA, an account in a fund is taken to be a lost member account – small account if all the following apply:
- the member on whose behalf the account is held is a lost member
- the balance of the account (on the unclaimed money day) is less than $6,000
- the account does not support or relate to a defined benefit interest (within the meaning of section 291.175 of the Income Tax Assessment Act 1997).
At the end of an unclaimed money day, you must identify any accounts that belong to lost members 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 – you are not required to add interest or deduct fees to determine whether the account is a lost member account.
You must provide information relating to the account to the ATO on the scheduled statement day.
Example: Balance over $6,000 on scheduled statement day
XYZ fund identifies that Jane, a member who meets the definition of lost member, has an account balance of $5,999 on the unclaimed money day of 31 December. As such, it is a small lost member account.
Before the corresponding scheduled statement day, 30 April, Jane's super account is credited with interest of $3.50, bringing the account balance to $6,002.50.
As the value of the account is below $6,000 on the unclaimed money day, and Jane remains a lost member on the scheduled statement day, the account must still be reported and paid to the ATO.End of example
Example: Balance under $6,000 on scheduled statement day
XYZ fund identifies that a member, Gerd, who meets the definition of a lost member, has an account balance of $6,010 on the unclaimed money day of 31 December.
Although Gerd 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 $5,996.50.
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 (30 June) then it may meet the definition of a small lost member account.End of example
Example: Account under $6,000 and member is inactive
Anna 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.
Anna is a lost inactive member with a small balance, so the fund must report and pay the balance to the ATO on the next reporting date as a small lost member account.End of example
Example: Member with multiple accounts on scheduled statement day
Uma has two super accounts with the same fund and is a lost member. 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 fund is required to report and pay account 1 as a lost member account to the ATO when the value of that account is below $6,000 on the unclaimed money day.
The fund must report and pay the amount to the ATO on the next scheduled statement day as a small lost member account.End of example
Example: Account under $6,000 and member is uncontactable
Tammy has a super account with a small balance of $1,900.
Her fund has an address for her and two separate pieces of mail returned unclaimed.
The fund has not received a contribution for Tammy in the last 15 months and she has not engaged with the fund.
Tammy is a lost member because she is uncontactable and has not had a contribution or rollover within 12 months.
On the next scheduled statement date, the fund must report and pay the balance to the ATO as a small lost member account.End of example
Example: Un-presented cheque or returned electronic payment
Jesminder is a member of a super fund with an account in pension phase. The account commenced more than 12 months ago and has a current balance of $3,000.
Pension payments are returned as an un-presented cheque.
Jesminder has not made any contact or act of engagement within the last year and the fund is unable to contact him to get new contact details or payment details.
Jesminder’s money is unclaimed.
This is a small lost account, as it satisfies the criteria in section 24B of SUMLMA.End of example
You must report and pay to the ATO amounts that meet the definition of a lost member account – inactive account of an unidentifiable member. This type of lost member account is commonly referred to as an insoluble lost member account.
Under subsection 24B(2) of the SUMLMA, an account is also taken to be an insoluble lost member account if all the following apply:
- the member on whose behalf the account is held is a lost member
- you have not received an amount in respect of the member within the last 12 months
- you are satisfied it will not be possible, considering the information reasonably available, to pay an amount to the member
- the account does not support or relate to a defined benefit interest (within the meaning of section 292-175 of the Income Tax Assessment Act 1997).
At the end of an unclaimed money day, you must identify any accounts belonging to lost members (as defined by the relevant regulations), and who meet the definition of an insoluble lost member (inactive account of unidentifiable member).
Examples of amounts that are received in respect of the member include:
- contributions, such as employer or personal contributions
Amounts received in respect of the member do not include interest or earnings that may be credited to the account by you.
Example: Interest or earnings are not considered amounts received in respect of the member
ABC fund holds an account for a lost member at 30 June 2022.
The last employer contribution credited to the account was on 15 March 2021.
No personal contributions, rollover or transfers were ever received.
The fund credited earnings every six months.
For the purposes of insoluble lost member accounts, ABC fund has not received an amount for the member within the last 12 months.End of example
The legislation prescribes that you must be satisfied, considering the information reasonably available, that you would be unable to pay an amount to the member at any time in the future. That is, at the time the account is assessed and based on the information you hold, if a person attempted to claim ownership, you could not be confident of verifying ownership.
Although the SUMLMA states the decision is to be made on any information reasonably available to you, it is expected you will, if you have not already done so, follow up any information that could be made available to you at this time.
This allows you to make a reasonable assessment of whether the amount will meet the definition of an insoluble lost member account.
For example, if an account would potentially meet the definition of an insoluble lost member account, but you believe you may be able to get further identity information about the member from the employer who contributed on their behalf, it would be expected that you contact (or attempt to contact) the employer.
The decision as to whether the member meets 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 legislation and must be determined in the context of the information held by you in a particular circumstance.
However, as a general guide, you must hold a minimum of two complete pieces of quality information about the member to enable you to determine and verify the identity of the person whose account you hold.
Example: One piece of evidence
An account was opened with HIJ fund for John in June 2002. No further information was provided and contributions ceased in July 2004.
No records exist to specify who made the contributions. HIJ's attempts to locate the member were unsuccessful.
HIJ have one piece of complete information and determine that this is insufficient to establish ownership of the account.
They identify the account as an insoluble lost member account for the purposes of the lost member account provisions.End of example
Example: Insufficient information
Joseph is a lost member and has a super account balance of $7,500.
No contributions or rollovers have been received within the last twelve months. Joseph’s super fund, HIJ 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 scheduled statement date as an insoluble lost member account.End of example
Even if you hold two or more complete pieces of information, you should still assess this information in terms of quality and whether it would truly allow you to correctly establish the identity of the account’s owner.
Example: Insufficient or incorrect information
QRS fund holds an account belonging to a lost member, John.
No contributions or rollovers have been received for over 12 months.
They have the member’s name and date of birth. On reviewing this information, the date of birth is recorded as 1 January 1900. As this date of birth is clearly not correct and the only other piece of information they hold is the member’s name, which is a relatively common name, this would generally not be sufficient for the fund to establish the member’s ownership of the account.End of example
Example: Unlikely information
QRS hold an account belonging to a lost member, Homer Simpson.
No contributions or rollovers have been received for over 12 months.
They have the following information:
Name: Homer Jay Simpson
Address: 742 Evergreen Terrace, Springfield
Employer: Springfield Nuclear Power plant.
Though they have 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 fund does not believe the information will assist in paying the account to the person it belongs to. Instead, they pay it to the ATO as an insoluble lost member account.End of example
Ultimately, the decision about whether you hold 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 guidance about the level of information that would not be considered reasonable to establish an account's ownership:
- John – only one piece of information
- Julie, 15 June 1964 – two pieces of information, but one is incomplete
- David, 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, Whoop Whoop Road, Outback – two pieces of information, but due to the vagueness of the address this may not be enough to establish ownership.
Once your member meets the definition of a lost member as defined by the SISR, you do not have any additional obligation to contact or locate the member at the time you determine if they hold a lost member account.
If an account is identified as a lost member account on an unclaimed money day, you must make the payment of the account to the ATO by the corresponding scheduled statement day where both of the following apply:
- the account is still held by the you on behalf of the person
- the person is still a lost member at the earlier of
- the calculation time
- the time payment is made (if an amount is payable)
- the time the payment is due and payable.
If a lost member account that must be paid to the ATO is subject to a payment split In which the non-member spouse is, or could be entitled to be, paid an amount, then the amount paid is worked out as follows:
- Work out the member's account balance at the payment date.
- For the lost member, only take into account their entitlement to payment after any reduction by the payment split (disregarding subsection 90MB(3) of the Family Law Act 1975).
- For the lost member, work out the amount that would normally be rolled over or transferred if this had been requested by the member (as set out above).
Example: Subject to family law payment split
An account has been identified as an insoluble lost member account.
On the unclaimed money day, the balance of the account is $9,705.
At the calculation time, the member is still a lost member and the account is still held by the fund.
Additionally, $95 in earnings had been credited to the account.
Despite minimal information being recorded against the account, the fund is aware that it is subject to a 50/50 family law payment split.
The amount payable to the ATO will be:
- (($9,705 + $95) ÷ 2) = $4,900.
The fund is also required to pay for the non-member spouse’s entitlement after giving effect to the payment split. This is payable to the ATO at the same time as the payment of the lost member account.
The fund must also include details of the non-member spouse (and the payment made for them) in the statement to the ATO.
The non-member spouse’s entitlement after the payment split has been applied is $4,900.
The fund is required to report and pay this amount to the ATO at the same time they report and pay in relation to the lost member account.End of example
If a lost member account is transferred to an eligible rollover fund (ERF) before an unclaimed money day, because you are not the holder of that account on the unclaimed money day there is no requirement to provide a statement about that account.
As the member remains a lost member (see paragraph 1.03A(1)(c) of the SISR) upon transfer to the ERF, the ERF may need to report and pay the lost member account – if the member has not been found and the ERF is the holder of the account on the next unclaimed money day.
See alsoInformation on unclaimed superannuation protocols for lost member accounts.