From 1 April 2022, parties to family law property settlement proceedings can apply to the Family Law Court registries to obtain details of their former partner’s superannuation information held by the Australian Taxation Office (ATO). The aim is to enhance the visibility of superannuation assets in family law proceedings, making it harder for parties to conceal their superannuation assets. Attwood Marshall Lawyers Family Law Special Counsel Michael Twohill discusses superannuation and property settlements.
Background
The COVID-19 pandemic has seen a considerable increase in family law property settlements. Around 42% of Australians have admitted they have experienced an adverse change in their relationship resulting from hardship emerging during the pandemic. The Australian Bureau of Statistics disclosed a 30% decrease in spousal unions from January to June 2020 and a notable increase in divorce proceedings.
The Morrison Government have introduced new measures to assist couples going through family law proceedings, making it difficult for parties to conceal their superannuation assets during the property settlement process.
The recently ratified laws are designed to ensure fairness in property settlements to prevent the under-reporting of superannuation assets and improve the retirement outcomes for women. Given that superannuation is one of the most significant assets many people hold, it comes as no surprise that this is an asset that many people have historically tried to conceal or have removed from the overall asset pool in separation proceedings. This is a step in the right direction to ensure property settlement matters can be wrapped up more efficiently, in less time.
Previously, the process has been arduous, drawn-out, and convoluted, resulting in many women, particularly those in low-income households, being unable to claim a share of assets they are legally entitled to.
Historically, the legal fees necessary to pursue an ex-spouse’s superannuation cost more than the value of a split comprised in a property settlement.
The process for splitting superannuation assets varies across superannuation funds, and fulfilling splitting orders is difficult without legal assistance.
The ATO has been working with the courts to ensure the system has established the necessary measures for the information to be disclosed securely.
There is an existing process that will remain available for parties to gain superannuation information directly from their partner’s superannuation fund, which is not impacted by this new process. However, the new process will improve transparency and visibility where there are apprehensions that the other party has not wholly disclosed all super assets.
Superannuation and property settlements
When two people separate and proceed to divide their property, superannuation is treated as an asset and included in the couple’s asset pool under the Family Law Act 1975. Superannuation does differ from other property types in that it is held in a trust. However, despite not being able to access superannuation before retirement, superannuation splitting laws allow superannuation to be divided when a relationship breaks down.
Depending on how the couple’s total assets are split, the superannuation balances of everyone may remain unaltered, with each spouse taking their respective entitlement from the asset pool. Alternatively, the superannuation entitlements of the parties can be divided equally between each party. The way super is split during proceedings can be negotiated and each case will be determined on its own facts and merit as to what is deemed fair and equitable.
For superannuation to be divided, there must be an order from the Federal Circuit Family Court of Australia, where the parties enter into a Binding Financial Agreement (in NSW the order must be obtained from the Local Court of New South Wales). In most cases, the funds are instantly rolled into the receiving spouse’s superannuation account. They will remain there until they can legally access it unless the receiver is aged 65 years or over.
Generally, for self-managed superannuation funds (SMSFs), an SMSF cannot acquire assets such as residential property from a related party. Still, there is an exemption when the acquisition results from a marriage breakdown. If real property like a residential rental property is involved in the superannuation, rules permit an in-specie rollover via court order or financial agreement instead of forcing the former spouses to sell the property. If the parties have a conjoined SMSF, advice should be sought regarding decisions about the SMSF in divorce proceedings and the resulting implications.
Visibility of superannuation for property settlement proceedings
The Visibility of Superannuation legislation amends Division 355 of Sch 1 of the Taxation Act 1953 to enable the secure electronic information-sharing mechanism between the Family Law Courts and the ATO.
Granting courts visibility of super information held by the ATO is envisaged to result in quicker and fairer family law property settlements.
Who is eligible?
You must be a party to an ongoing family law proceeding in either the Federal Circuit and Family Court of Australia (FCOA) or Family Court of Western Australia (FCWA) to make an application.
You cannot make applications for superannuation information directly to the ATO.
Either party or their legal representative may apply directly to the Courts for visibility of their spouse or defacto superannuation information.
How to make a request
The petition for superannuation information must be made via the approved Superannuation Information Request Form using the online Commonwealth Courts Portal. You must be part of an ongoing property settlement proceeding to make this request.
You will need to provide as much information as possible about the party whose superannuation information is being sought when completing the form. The more information provided, the better chance of a successful match by the Australian Taxation Office (ATO).
Types of responses
The ATO will respond to the Court by letter advising either:
- an individual located and super found
- individual located and no super found
- an individual unable to be located.
When they have located the individual in their system, the ATO will provide information about the super accounts held by them. Note, that information should be verified with the super fund to obtain the most accurate account balance.
If the ATO cannot locate the individual using the information that has been provided in the search request, a new request for information may be submitted via the Court.
If you do not have any additional identifying information and the ATO has been unable to locate the individual, it is important to obtain legal advice about other recourses that may be available.
Atwood Marshall Lawyers – supporting families through separation and resolving property disputes
When a relationship breaks down and couples go their separate ways, determining the division of property can be one of the most emotive and stressful times. Former couples often fight over not just valuable assets such as real property, money in bank accounts, and superannuation, but invaluable items that hold sentimental value.
Property disputes can often be drawn out and take excessive time for former couples to come to an agreement that is considered fair and equitable. This can be particularly so when both parties are hesitant to disclose all their assets. There are not only the legal considerations that must be reviewed during a property settlement but also the tax consequences that may result from splitting superannuation.
The latest change in legislation to make superannuation visible will help reduce the time it takes to identify the interests of each party to the property, determine whether it is equitable and just to make a property settlement, determine the financial and non-financial contributions made by both parties, and obtain a fair property settlement so that everyone can move on with their lives.
An accomplished family lawyer can help make the application seeking information about superannuation funds as efficient and accurate as possible, saving you time and money and hopefully settling your matter sooner.
Our dedicated family law team specialise in all aspects of family law, including guiding clients through the process of separation, divorce, property settlements, binding financial agreements, parenting disputes, child custody, estate planning, child support, and spousal maintenance.
We can help you realise your rights and obligations when you separate from your former partner and will guide you through this challenging time and change in your family circumstances.
To discuss our family law services, contact our Family Law Department Manager Donna Tolley, on direct line 07 5506 8241, email dtolley@attwoodmarshall.com.au or free call our 24/7 phone line on 1800 621 071
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