Separating couples to get easier access to partner's super details
New laws to make it easier for divorcing couples to access partner’s super details
Couples going through divorce proceedings will be able to access their partner’s superannuation information more easily in future.
From 1 April 2022 the Australian Taxation Office (ATO) will be able to release this information to a family law court.
If one of the divorcing parties believes the other is not being forthcoming about the value of their super assets, they’ll be able to apply to the court to have the information disclosed.
Previously, unless the information was willingly supplied, it had to be obtained through expensive and time-consuming subpoenas or court orders.
In making it easier to access super information, the new laws will reduce the risk of a partner under-reporting their super and getting away with it.
This is especially important to women who — because they do most of the caring for children and thus work less than men — retire with around 42% less super than men.
What happens to super in a divorce?
In a divorce, super is treated like any other asset and included in the division of assets in a property settlement or financial agreement.
There are generally three ways of dealing with super benefits on separation, namely:
- Payment split — the spouse who is a member of a fund has part of their super benefit paid to the non-member, ex-spouse.
- Payment flagging — the super benefit is paid to the non-member, ex-spouse when a future event occurs (e.g. they retire).
- No split or flag — the super benefit remains untouched, with the non-member, ex-spouse being given non-superannuation assets of the relationship instead.
If a superannuation account is split, the funds are often rolled over or transferred into the receiving spouse’s super account and remain there until they’re legally allowed to access it.
The funds retain the taxable and tax-free components of the account from which the funds are being transferred.
Self-managed super funds
If the super is held in an SMSF, there are extra considerations, especially if, as is often the case, the divorcing couple are trustees of the same two-member SMSF.
Unsurprisingly, it’s common for one member to step down from the SMSF when they divorce.
While an SMSF cannot normally acquire assets such as residential property from a related party, it can when the acquisition stems from a marriage breakdown.
In this case, the rules allow an in-specie rollover under a court order or financial agreement, saving the former couple from being forced to sell the property.
The spouse to whom the property is transferred does not have to pay any capital gains tax on it.
Get expert advice
If you and your spouse are contemplating divorce and you’d like some advice on your finances, including how best to deal with your super upon separation, we can help.
Contact us for a complimentary consultation at firstname.lastname@example.org or 1300 888 803.
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