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Superannuation
Since 2002 the Family Law Act 1975 (Cth) has provided that superannuation is to be treated as property in family law proceedings, allowing it to be ‘split’ between separating spouses. Whilst superannuation can be split to a former spouse’s nominated superannuation account, the usual restrictions on accessing superannuation prior to preservation age will continue to apply.
How does the superannuation split occur?
For a trustee of a superannuation fund to split superannuation, the trustee of the superannuation fund must be served with either an order of the Federal Circuit and Family Court of Australia or a properly executed Financial Agreement providing for the superannuation split to occur.
Flagging Order
If a party is concerned that a spouse will access their superannuation they can apply to the Court for a “flagging order”. A flagging order will bind the Trustee of the spouses superannuation fund(s) to freeze their super account(s) until such time as property settlement between the parties is resolved and the Court makes a “flag lifting Order”.
A payment flag can be made by an order or by agreement in accordance with the provisions of the Family Law Act. A flagging order or agreement is a binding injunction on the trustee not to make any splittable payments from the nominated superannuation fund and is usually used in two distinct circumstances:
where the value of superannuation interest is currently unknown but will be known in the near future; or
where retirement is imminent and there is concern that the member may abscond.
Changes commencing from 1 April 2022
The Australian government in September 2021 passed legislation which will allow the Australian Taxation Office (ATO) to release superannuation information to a family law court upon request. From 1 April 2022, to obtain this information, an applicant will have to be a party to a family law property proceeding and apply to a family law court registry to request their former partner’s superannuation information, held by the ATO.
These amendments came as a result of making it more difficult for parties to hide or under-disclose their superannuation assets in family law property proceedings, and to reduce the time, cost and complexity for parties seeking information about their former partner’s superannuation.
