A holder of unclaimed money is a person or organisation which holds money for an owner who cannot be located.
Generally, money will become unclaimed where the owner has not interacted with the money for 5 years. Where an owner has more than one account with the same organisation or person, the owner’s activity on one account will prevent the money in all of the owner’s accounts from becoming unclaimed.
Example: Sabena has two accounts with the same bank
Sabena has $1,000 in a savings account at a bank. She is keen to save the money, so she decides to leave the $1,000 untouched and doesn’t withdraw any money for 10 years. She also holds an on-call account with the bank which she often accesses for her everyday purchases. Sabena’s interaction with her on-call account will stop the funds in both accounts from becoming unclaimed.
Amounts which are more than $100 will become unclaimed money under the Act. Amounts which are $100 or less and owed to the same owner (such that they collectively exceed $100) are also unclaimed money.
For amounts $100 or less you have two choices.
- Send them to us as unclaimed money
- Keep them for an alternative purpose such as donating to charity
If you keep money of $100 or less, you will need to consider how to treat it for tax purposes. Owners will still have a claim on you for any sums of $100 or less that you do not send to us.
Our Public Rulings BR Pub 17/01 and BR Pub 17/02 cover the income tax treatment of unclaimed amounts of $100 or less and amounts of $100 or less held on trust.
Types of unclaimed money with specific guidelines
Unclaimed money with specific guidelines includes the following.
- renewing term deposit
- holiday pay
- situations where a former client has been overcharged
Money in a renewing term deposit
Money in a renewing term deposit is usually either reinvested at the end of the term or paid to its owner. If a term deposit is the only investment a customer has with an organisation, the 5 year deeming period starts after the investment term rolls over for the first time. Once the deeming period starts the money becomes unclaimed if there is no interaction between the owner and the organisation. The holder must still make reasonable efforts to locate the customer.
The holder does not have to pay the money to us until the deposit matures. Not breaking the deposit before it ends means the owner is not financially disadvantaged. The unclaimed money should be sent to us in the next relevant filing period.
Remediation of holiday pay
If an employer cannot find a past employee (or the executor of their will), the holiday pay becomes unclaimed 5 years after the date the amount is calculated as owing to the employee. If no payment to the employee is made, the employer does not have to deduct PAYE. The full gross amount should be sent to us as unclaimed money. Refer to Commissioner’s Statement CS 17/02.
A former client cannot be located
Organisations holding unclaimed money should make reasonable efforts to find the owner of the money and repay it. For example an organisation discovers it overcharged a former client but cannot locate the client to return the money. Rather than hold the money for 5 years, the organisation may choose to pay the money to us earlier.
For more guidance on these and other matters relating to unclaimed money (including making reasonable efforts to locate an owner and transitional information) see the Special report pages 50-63.