Following the breakdown of the marriage or de facto relationship, parties must consider how assets held in their joint or sole names are to be divided. This is known as “property division”.
Property division takes into account all assets, liabilities and financial resources of the parties. This includes the superannuation interest of the parties.
Superannuation splitting is available to both married and de facto couples throughout Australia except in the state of Western Australia.
In Western Australia, superannuation splitting is only available for married couples. It is not available for de facto couples in Western Australia. Instead, the superannuation interests of a de facto couple are considered a financial resource to be taken into account when considering the overall division of the assets of the parties.
Based on the current legislation, superannuation interest having a withdrawal benefit of less than $5,000, or paying a non-commutable pension or an annuity of less than $2,000 per annum, are considered “unsplittable interests” and hence cannot be split between the separating parties.
As with all other assets, the superannuation interest of the parties can be divided or split by agreement. If agreement is reached, parties can enter into a formal written agreement (which is known as a superannuation agreement and requires a solicitor to provide a certificate stating that independent legal advice has been provided to the parties) or file consent orders in the Family Court. If no agreement is reached and an application for property division is made, it will be decided by the Family Court pursuant to a court hearing.
Superannuation is dealt with separately to property orders. It allows the separating parties to value their superannuation, both accumulated and potential and split superannuation payments.
Splitting does not convert superannuation into a cash asset which can be accessed and utilised immediately. It is still subject to superannuation laws and must usually be retained until a condition of release (e.g. retirement age) is reached.
The splitting of superannuation interest is subject to the same principles applicable to the division of the other assets of the relationship.
This means that all superannuation acquired whether prior to the commencement of the relationship, during the relationship or after separation had occurred is taken into account. There is no automatic 50/50 splitting of the superannuation interest. If there is no agreement and the court is required to make a decision, the court has a discretion to make orders that it considers “just and equitable”.
When one of the party’s superannuation is split by agreement or court order, the splitting can occur in one of the following ways subject to the rules of the superannuation fund:
There are tax implications when superannuation is split and parties are strongly recommended to seek the appropriate financial and tax advice before finalising any agreement or court orders relating to superannuation splitting.
For all enquiries please contact Robertson Hayles Lawyers on (08) 9325 1700 by email at enquiries@robertsonhayles.com or via our contact form and we will be happy to assist you.