31 August, 2012

 

Unclaimed money obligations – are you compliant ?

 

• State and Territory authorities (such as the State Revenue Office, State Treasury or Public Trustee) have the power to investigate whether businesses have complied with their unclaimed money obligations. These obligations include the requirement to maintain an unclaimed money register in an approved form and to lodge and pay any unclaimed money to the relevant State and Territory authority by a specified date each year.
• State and Territory authorities may enforce compliance of unclaimed money obligations by imposing penalties (of up to 75%) and interest on any unclaimed money owed at the time of the default.
• State and Territory authorities have recently increased their audit activities in respect of unclaimed money obligations and so businesses should ensure that they are compliant with their unclaimed money obligations.

 

Unclaimed money legislation differs between each State and Territory. We note that there is a separate unclaimed money regime relating to unclaimed superannuation money. We have not dealt with these rules in this bulletin.

 

What is unclaimed money?

 

Generally, unclaimed money refers to money that remains owing and unclaimed with no activity relating to the money for a specified period of time. The definition of unclaimed money varies between each State and Territory. We have summarised what constitutes unclaimed money by jurisdiction below:

 

State/ Territory	Value of unclaimed amount held	Period of time unclaimed	Held by
Victoria	$20 or greater	At least 12 months	Any business in Victoria
New South Wales	$100 or greater	At least 6 years	An account in NSW
Queensland	All amounts	At least 2 years	The Queensland Government, an accountable person (eg a solicitor or an accountant) or a company registered in Queensland
Western Australia	$100 or greater	At least 2 years (voluntary option) or 6 years (mandatory)	Organisations based in Western Australia
South Australia	$10 or greater	At least 6 years (where held by a company) or At least 12 months (where held by another person)	Organisations where the head office of the entity is in South Australia or an entity which carries on business in South Australia
Australian Capital Territory	All amounts	At least 3 years for licenced agents (eg real estate, travel or business agents) or At least 6 years for other entities	Accounts held by companies which have remained inactive for 6 years or trust money held by licenced agents for 3 years or trust money held by solicitors for more than 6 years
Northern Territory	All amounts	At least 3 years	Companies whose head office is located in the Northern Territory
Tasmania	$6 or greater	At least 6 years	Any person carrying on business in Tasmania and a company within the meaning of the Corporations Law

 

The above definitions of “unclaimed money” are not location specific. This may raise jurisdictional issues when an entity is attempting to determine in which jurisdiction to lodge unclaimed money. For example, an entity may operate a business across States/Territories and hold unclaimed money across States/Territories.

 

What are my obligations in respect of unclaimed monies?

 

As the unclaimed money legislation varies between each jurisdiction there are different requirements imposed on entities which are required to lodge and pay unclaimed monies with a State or Territory authority. Generally, entities are required to comply with the following obligations:

 

(a) Prepare and maintain a register of unclaimed money for a specified period;

(b) Lodge the register of unclaimed money with the relevant State or Territory authority in the approved form including all prescribed information. In most cases a register lodged with a State or Territory authority is required to contain the following details for each individual amount of unclaimed money:

i. Name of the owner of the unclaimed money;

ii. The last known address of the owner of the unclaimed money;

iii. The date of birth of the owner; iv. ABN or ACN of the owner (if relevant); v. A business reference for the amount of unclaimed money;

vi. The gross amount of unclaimed money; and vii. A description of the unclaimed money.

(c) Prepare a return in a prescribed form for the unclaimed monies lodged for a period; 

(d) Make entries on the relevant unclaimed money register kept by the entity;

(e) Remit the amount of unclaimed money identified on the register of unclaimed money register lodged for the period to the relevant State or Territory authority; and (f) Keep records relating to unclaimed money for a specified period of time.

 

What happens if I do not comply with my obligations?

 

The relevant State or Territory authority may impose penalties for non-compliance with unclaimed money obligations. Interest may also be imposed in addition to any penalties imposed.

 

Penalties for non-compliance with unclaimed money obligations may be severe. For example, in some jurisdictions a penalty of 75% may apply to an unclaimed money amount which has not been remitted where there has been evidence of deliberate non-compliance. Other penalties, may include penalties for failing to keep adequate records or for failing to lodge an unclaimed money return within the specified timeframe.

 

We also note that company officers may be personally liable where they provide false or misleading information in the course of an unclaimed money investigation or where they have failed to comply with a formal notice requesting certain information in the course of an unclaimed money investigation.

 

Where there has been non-compliance, in some jurisdictions a voluntary disclosure may reduce the applicable penalty by up to 80%.

 

It is important for businesses to be aware of their responsibilities regarding unclaimed money. The State and Territory authorities have recently increased compliance activity in this area.