The ATO is Holding Billions in ‘Lost’ Super. Is Some of It Yours? A Guide for Individuals and Employers.

ByPAG

Billions of dollars in superannuation is currently sitting with the Australian Taxation Office (ATO) as ‘lost’ or ‘unclaimed’ super.

This is more than just a forgotten account; it’s your hard-earned retirement savings. Today, the specialists at PAG are breaking down what “ATO-held super” is, why it happens, and the critical steps both individuals and employers must take.

What is ATO-held Super?

ATO-held super is superannuation money that is transferred from regular super funds to the ATO when the fund can no longer contact the member or the account meets specific ‘lost’ or ‘inactive’ criteria.

While this money is secure and remains your asset, it comes at a significant cost: ATO-held super only earns interest based on the Consumer Price Index (CPI). It is not actively invested, meaning it misses out on the compound growth and higher potential returns of a professionally managed super fund.

The Main Types of ATO-held Super

Your money can be transferred to the ATO for several reasons, primarily falling into two categories:

1. Unclaimed Superannuation Money (USM)

This is the most common category, where funds are legally required to transfer money to the ATO under specific conditions:

  • Members 65 or Older: When a member is 65+, the fund has not had contact for 5 years, and the account has been inactive for 2 years.
  • Deceased Members: When a member has passed away, and the fund has been unable to pay the benefit to the rightful beneficiary after making reasonable efforts.
  • Non-Member Spouses: Funds owed to a non-member spouse (e.g., from a super-split during a divorce) where the fund cannot make contact.
  • Lost Members: This category covers accounts transferred to the ATO once a member is classified as ‘lost’. This primarily includes Small Lost Accounts, which are those with a balance under $6,000 where the member is uncontactable (e.g., mail returned) and the account is inactive, as well as Insoluble Lost Accounts, which are accounts of any balance where the fund has determined, after reasonable efforts, that the member can never be found.
  • Inactive Low-Balance Accounts (ILBA): As part of the Protecting Your Super package, funds must transfer accounts with a balance under $6,000 that have been inactive for 16 months (i.e., received no contributions). This is designed to protect small balances from being eroded by fees.
  • Former Temporary Residents: When a temporary resident (e.g., Working Holiday, Student, or TSS visa) leaves Australia, their visa expires or is cancelled, and their super balance is not claimed within 6 months, the fund must transfer it to the ATO.

2. Superannuation Holding Accounts (SHA)

This is a legacy category. The SHA was historically used by employers to pay super contributions (like the Super Guarantee) when they did not have the employee’s choice of fund details. This is now largely obsolete due to the ‘Stapled Fund’ system.

[FOR INDIVIDUALS] How to Find and Reclaim Your Super

Finding your super is surprisingly simple.

  1. Check: The fastest way is to log in to your myGov account and link to the ATO. Navigate to the “Super” tab. This will show you all your super accounts, including any balances held by the ATO.
  2. Consolidate: If you find any ATO-held super, you can use the myGov tool to ‘consolidate’ it into your preferred, active super fund with just a few clicks.

PAG Tip: Consolidating your super not only gets it out of the low-interest ATO account but also saves you money by reducing multiple sets of admin fees across different funds.

[FOR EMPLOYERS] Your Critical Role and Obligations

Employers play a vital role in preventing super from becoming ‘lost’ and must be aware of their legal obligations.

The Risk of Non-Payment (SGC)

Many businesses face penalties for late or non-payment of super, often claiming, “I didn’t have the employee’s fund details.” This is no longer a valid excuse and can lead to the severe, non-deductible Super Guarantee Charge (SGC).

(For more on this, see our article: “Missing This One Superannuation Statement Could Cost You Thousands”)

Your Legal Duty: The ‘Stapled Fund’ System

To combat this, the ‘Stapled Super Fund’ system is in place.

  • What is it? If a new employee does not nominate their own super fund, the employer is legally required to request the employee’s ‘stapled’ (existing) fund from the ATO.
  • The Bottom Line: You cannot default to your company’s chosen fund or fail to pay. You must request the stapled fund from the ATO. (Note: We will cover the exact process for requesting a stapled fund, and how to manage this correctly in Xero Payroll, in our upcoming employer guide. Follow us for updates!)

Smart Off-boarding for Temporary Visa Staff

When an employee on a temporary visa resigns to return home, they will likely ask, “What about my super?”

This is a key moment for an employer to provide value. We recommend guiding them:

“Your superannuation is your asset. After you leave Australia, you can claim it through a process called DASP (Departing Australia Superannuation Payment).”

Final Thoughts

Superannuation is one of your most important future assets.

For individuals, take 5 minutes today to log in to myGov. Find your super, consolidate it, and put it to work. For employers, ensure your onboarding process is compliant with Stapled Fund rules to protect both your employees and your business from penalties.

Reference Links:

Have questions about how this applies to your business?

We’re here to help — no jargon, no obligation.

Talk to Us About Your Situation

[email protected]

Disclaimer: The information provided in this article is for general informational purposes only and should not be considered as legal or tax advice for any specific situation. You must consult with a qualified professional regarding your individual circumstances.

Liability limited by a scheme approved under Professional Standards Legislation.

Similar Posts