Your ‘lost’ super could be costing you money

A recent report from the Federal Treasury said there were around six million “lost” superannuation accounts holding a total of about $18 billion as at mid 2014. This figure represents roughly one in five of every superannuation account.

A lot of working Australians may not even know that there could be super money out there that they’ve lost track of – people can change jobs a number of times over the years, or change address or even their name, and any super funds that were holding funds for them simply may not have the most current contact details.

Super is considered “lost” if the fund can’t reach the person it belongs to, but also if the account has been inactive, with no contributions or rollover amounts being deposited for a period of a year. Unclaimed super money can also come about where an account is split, such as in a divorce settlement.

A lot of the lost money is in smaller amounts, but the tax rules that apply to all other super entitlements will still apply. And with super fund fees also eating into what’s left, finding a cache of extra money, no matter how small, is probably worth the effort.

According to new figures released by the Tax Office, 45% of working Australians have more than one superannuation account, and many taxpayers are not even aware they have these extra, or “lost”, superannuation accounts. As mentioned, changing jobs or moving house can often result in people losing track of these funds.

But remember, the Tax Office warns that having multiple funds could mean that many Australians are paying more — even up to thousands of dollars — in unnecessary fees each year. A recent study conducted by the Australian Prudential Regulation Authority (APRA) revealed that the median figure for fees and charges paid by Australians for a low-cost superannuation account is $532 a year.

The Tax Office is encouraging anyone with more than one super fund to consider consolidating their super into one preferred account. It says an efficient tool to use is the improved myGov online portal to check their super accounts and consolidate multiple accounts.

Using myGov to consolidate your super

Create a myGov account at the website my.gov.au, then link the Tax Office to your account (if you already have a myGov account, just log in and click on the Tax Office link).

Go to the “Super” tab.

You can do any of the following:

• see details of all your super accounts, including any you have forgotten about
• see details of any super the Tax Office is holding on your behalf
• combine multiple super accounts.

myGov allows you to check all your super accounts, find lost super, or any super being held for you, and request a transfer of super online.

• exclude another trustee from the decision-making process
• ignore requests to redeem assets and roll money over to another regulated complying super fund
• take any action that is not allowed by the Superannuation Industry Supervision (SIS) Act 1993 or the SMSF’s trust deed.

So clearly a “de-coupling” on a personal level does not wash away one’s duties as a trustee, although this situation couldbe less of an issue if the trust deed is set up using a corporate trustee.

There are of course many other assets that SMSFs can hold, and before settlement can be agreed upon, or ordered by a court, these assets will need to be valued. For the scenario mentioned above, where business premises comprise the major asset of the SMSF, unless there are enough liquid assets available to allow the SMSF to cover the divorcing spouse’s share of that value, the business premises may need to be sold.

A possible way out of this difficulty would be available if the premises had been acquired under a unit trust structure. An SMSF corporate trustee could then redeem units for cash (to cover the divorcing spouse’s payout), and take up a limited recourse borrowing arrangement to acquire a beneficial interest in the same business premises. Of course this solution would only be available if the SMSF were set up initially with a corporate trustee and had an investment strategy that made use of unit trust structures.

Where the divided share of SMSF assets from a divorce are rolled over into a new fund, care needs to be taken that these are not sold for cash first and then the cash proceeds transferred to the new fund. Assets transferred in-specie are not subject to CGT and the original cost base is retained in the new fund, but these concessions are lost if a cash value is realised before rolling over.

And while on the subject of in-specie assets, while in usual circumstances the rules disallow the acquisition of assets from related parties, the legislation has been amended to allow this as a result of marriage breakdown. This broadening of the scope for such transactions applies to assets acquired on or after November 17, 2010.

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