Superannuation assets can no longer be kept secret in family law property settlements
From 1 April 2022 changes to superannuation laws mean that superannuation assets can no longer be hidden during a family law property settlement.
Under amendments to the Family Law Act 1975 and the Income Tax Assessment Act 1997, it will be harder for a person involved in property settlement proceedings as part of divorce or separation to hide or under-disclose their superannuation assets.
New laws ensure full transparency of superannuation assets
From April 2022, persons involved in post-separation legal settlements will be able to apply to the Family Court for information from the Australian Tax Office about their former partner’s superannuation holdings. (See Treasury Laws Amendment (2021 Measures No. 6) Bill 2021, Parliament of Australia.)
It will be tougher for parties going through a separation to hide the amount they have in super. It will also save time, cost and complexity for those seeking information about their former partner’s superannuation assets.
Historically it has been women who have faced extensive delays and legal fees trying to discover the full extent of assets of their former partner in family law property settlements.
You can read more about financial problems associated with separation and divorce on the Australian Institute of Family Studies website.
Incoming super legislation means fairer property settlements
Close to half of Australians with a superannuation account have more than one account. That can make family property proceedings difficult if a former partner doesn’t reveal the extent of assets held in all their various super accounts.
Studies have found two-thirds of women suffer financial hardship within 12 months of separation. In many cases, they might have received more in a property settlement if their ex-partner had had to disclose the full extent of their superannuation assets.
How is superannuation split when a couple separates?
Superannuation is considered as property in a relationship breakdown, just like a house, car or investments.
When a couple separates, their combined super can be split between them by mutual consent or by court order. (See Superannuation Splitting, Attorney-General’s Department.)
Splitting super doesn’t convert into immediate cash, but is subject to superannuation preservation laws. The money stays in a super fund until a release condition is satisfied.
A second option is to defer a decision with a “flagging agreement” until the super holder retires. This prevents the super fund from paying out from the account until the flag is lifted.
A third option is not to touch super accounts, but to take the superannuation assets into account when dividing other property.
What happens if you cannot agree on how to split superannuation?
Superannuation agreements must be prepared by a family law solicitor, who has to certify that you have both received independent legal advice. This agreement is then used to obtain a consent order from the Family Court to divide the superannuation.
But what if you’re unable to agree? The court will then decide how to split the superannuation assets, by weighing what is “fair and equitable” for both parties.
This can include what each party brought into the relationship, what each partner contributed during the relationship, and the needs of each party after separation, especially where there are dependents.
It is important to remember that stay-at-home parents who have not worked for many years are recognised in law as contributing equally to the couple’s assets with the working partner.