LAST week this column made the point that Treasurer Wayne Swan is desperate to find things to tax in an effort to make his coming May budget add up a little better. That point was dramatically emphasized last Wednesday.
Mr Swan introduced to Parliament a bill to change the rules defining unclaimed money. He wanted to reduce the time that bank accounts can remain untouched before they are declared unclaimed and must be transferred to the Treasury.
Until now accounts have had to be unused for seven years before they are deemed unclaimed but Mr Swan wanted to reduce that to three years. This would give his revenue collections a big once-off windfall gain.
Last October Mr Swan proposed to redefine lost superannuation accounts so they could be transferred to Treasury sooner. Last week’s bill reduced the period that super accounts can remain untouched before they must be transferred to the Government from five years to just one.
Last Wednesday the House of Representatives passed both proposals. Bank accounts unused for three years and super accounts of less than $2000 that have no contributions for one year must now be transferred to the government.
MP’s voting in favour of both proposals included Tony Windsor, Rob Oakeshott, Bob Katter, Adam Bandt, Peter Slipper and Craig Thompson. Of the crossbench MP’s only Andrew Wilkie voted with the Coalition to try to stop Swan’s cash grab.
This is disgraceful. As one of my clients said last week “Does this mean we live in some sort of Gestapo-land, where the government can confiscate any of our possessions it likes if we haven’t been using them recently?”
These laws really are a low act. Obviously the Treasurer is extremely desperate. There are a multitude of reasons why super and bank accounts can remain unused for more than the times specified.
Young people will be severely affected. Most youngsters try several jobs before deciding on their long term career. In most cases a new super account is set up by each employer and often the balance is under $2000. Well invested over a working life though, these can grow to a lot of money.
Many youngsters travel overseas for a gap year or longer. They too will lose their super. Anyone who does not combine their previous super into their current account after leaving a job they were not at very long will lose it to the government.
Some people intentionally retain their old super fund by preference. Financial advisers often recommend clients not combine their super accounts because of insurance attached that may be irreplaceable if the person’s health isn’t ideal.
If the government closes someone’s super account and takes the money, thereby cancelling the life insurance included in it, will it pay the death or disablement insurance benefit if a disaster should happen to the member? One suspects not.
Super funds will write to members warning them the government is about to take their money. However many people forget to tell their old fund of a change of address promptly and so won’t receive the letter that would alert them.
Confiscating bank balances of any size after three years is just as unethical. Many large commercial transactions require large bonds, sometimes millions of dollars, to be retained for up to five years or longer, to ensure the fulfilment of all clauses in a contract.
It is good financial planning to have a “rainy day” account, an emergency reserve that can be called upon in tough times. This could remain untouched. We all need a backstop so we can survive to succeed another day.
Many people put money in trust for children or grandchildren in a savings account. If they don’t add to it for three years it will be lost. Wills often specify that inheritances be paid to young beneficiaries once they reach a designated age. That money too could be confiscated by the government.
Of course the government says we can get our money back by applying to Treasury. But it pays no interest. And why should we have to? It is time consuming and difficult. The proofs required are onerous.
We need to protest to all Federal MP’s about this issue now. Our office can provide a list of the email addresses of all MP’s to those who wish to do so.