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FamilyMarch 17, 2021

De Facto Superannuation Splitting

Why this new legislation is relevant for women

For many years, Western Australian de facto couples have been unable to split or transfer their superannuation following separation. This has led to increasing injustice, particularly in cases where the couple owns a small asset pool and superannuation is the parties’ main asset.

This situation often disadvantages women who, typically, tend to have less superannuation. New legislation recently enacted by the Commonwealth Government promises to correct this injustice.

What is Superannuation Splitting?

The term ‘superannuation splitting’ refers to the process of transferring superannuation interests from one party’s superannuation fund to the other party’s superannuation fund following separation.

Why have Western Australian de facto couples been treated differently?

Under the Australian Constitution, the Commonwealth Government has the power to make laws about the separation of married couples, but the states retain the power to make laws about the separation of de facto couples. Between 2003 and 2010, all states in Australia except for Western Australia provided the Commonwealth with ‘referred power’ to make laws regarding de facto financial settlements (including superannuation splitting).

Western Australia is the only state in Australia that decided against referring their powers to the Commonwealth to deal with de facto relationship matters. In Western Australia, de facto relationship matters are dealt with under the Family Court Act 1997 (WA) (“the WA Act”).

Unfortunately, the Western Australian government does not have the jurisdiction to make laws about superannuation splitting, so Western Australian de facto couples have been disadvantaged.

In practice, this has meant that when de facto couples separate in Western Australia, their superannuation has been treated as a ‘financial resource’ which is taken into account when making a property distribution, but not as property which is itself capable of being split between the parties.

The New Legislation

In 2018, the Commonwealth Government (after over a decade of negotiation) accepted a limited referral of power from the Western Australian government to enable superannuation splitting in Western Australia. In 2019, a bill was introduced into the Commonwealth Parliament to allow for de facto super splitting in Western Australia.

On 8 December 2020, the Family Law Amendment (Western Australia De Facto Superannuation Splitting and Bankruptcy) Act 2020 (“the Act”) received the assent of the Governor General.

The purpose of the Act is to “allow certain payments (splitable payments) in respect of a superannuation interest to be allocated between de facto partners in a de facto relationship in Western Australia, either by agreement or by court order.”

The practical effect of the Act will be to extend the operation of the Commonwealth’s current superannuation splitting laws to Western Australian de facto couples.

Whilst de facto couples’ substantive property settlement proceedings will continue to be heard under the WA Act, the new legislation is drafted to ensure that superannuation splitting proceedings can be heard before the same Judge, thereby resolving matters quickly and cost-effectively.

The legislation also extends the jurisdiction of the Family Court of Western Australia to concurrently determine family law and bankruptcy matters involving de facto couples.

Who Will Benefit?

The new superannuation splitting laws will apply to current de facto financial cases before the Family Court of WA which are not yet finalised, as well as future cases involving de facto property divisions.

The next step

You should make an Enduring Power of Guardianship as soon as possible. Sadly, any of us can lose capacity to make decisions at any time because of an unforeseeable circumstance such as illness or accident.

The next step in this reform process will be for the Western Australian Government to enact specific legislation to support the operation of the Act within the family law system.

The experienced lawyers at Frichot lawyers can:

  • Provide legal advice and representation for de facto separations; and
  • Advise on superannuation splitting specifically.

Frichot Lawyers