ATO urges SMSFs to prepare for ‘protecting your super’ changes
With APRA-regulated funds required to start reporting and transferring inactive low-balance accounts to the ATO by 31 October, SMSF trustees have been reminded that any inactive accounts they have in retail or industry funds may be rolled over to their SMSF.
Earlier this year, the government passed its Treasury Laws Amendment (Protecting Your Superannuation Package) Bill 2018, which was aimed at reducing the erosion of superannuation balances and inappropriate insurance arrangements.
The new changes mean that superannuation accounts with balances below $6,000 that have not received a contribution for 16 months will be transferred over to the ATO.
Originally, the bill also contained a measure which would have seen insurance in super offered on an opt-in basis to those under the age of 25, those with balances below $6,000 or accounts that have not received a contribution for 16 months and are inactive.
This measure was opposed by the Greens, however, and removed before the bill was passed.
The ATO said that APRA-regulated super funds will be required to report and pay inactive low-balance accounts to the Tax Office as a new category of unclaimed super money for the first time by 31 October.
“While SMSFs won’t be required to report and pay inactive low-balance accounts, they may receive a rollover of consolidated unclaimed super money for members,” the ATO said.
“We will now be able to proactively consolidate eligible unclaimed super money into eligible active super accounts, including SMSFs and small APRA funds, if an individual hasn’t requested a direct payment of this money or for it to be rolled over to a fund of their choice.”
The ATO said that it will start proactive consolidation from November and notify individuals when it has consolidated their unclaimed super money into an active account.