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You will no doubt be familiar with Super Tuesday as that day in the US presidential election where primaries are held 10 states on the same day.  Well yesterday the Full Court of the Family Court released four decisions on the operation of the super splitting amendments under the Family Law Act:

 1.                C v C:  A majority of the Full Court found that superannuation is a new species of asset

2.                W v W:  The Full Court set aside the decision of the trial judge for failing to give sufficient weight to post separation contributions to superannuation

3.                I v I:  The Full Court set aside the decision of the trial judge where the trial judge adopted an asset by asset approach but did not apply the approach properly.  The trial judge did not compare the outcome globally

4.                C and H and DFRDBA:  A case stated where the Full Court found that the payments to the second wife were out of the reach of the first wife after the death of the husband.  The payments were not splittable.

For a copy of the decisions and a summary and commentary go to the member’s side of the website at www.supersplitting.com.au and click on “case law”.

9 December 2004

Family Law Amendment (Annuities) Bill 2004

The Family Law Amendment (Annuities) Bill passed the House and Representatives today and will now be presetned to the Governor-General for Royal Assent.

The Bill will amend the definition of "eligible superannuation plan" to include an eligible annuity.  An eligible annuity can be purchased with superannuation monies and its exclusion from the super splitting amendments in Part VIIIB has been seen as anomolous.  This Bill corrects the anomoly.

The commencement of the amendment may still be some six months away given that there are further consultations with the annuity providers and further regulations to be made.

2 April 2004

Commonwealth Schemes

The Superannuation Legislation Amendment (Family Law) Bill 2002 has finally passed Parliament!!  In the debate in the Senate, Senator Conroy said:

"Time and again this Bill has been listed for debate in the Senate yet with regular monotony the Government withdraws the Bill despite the distress and hardship the delay is causing to couples affected by it."

There were a number of technical amendments made to the Bill but the most significant amendment is that  the amendments will apply to superannuation interests under the Parliamentary Contributory Superannuation Act 1948.  A copy of the amendments (for those who like to read in a "cut and paste" manner) can be obtained at http://parlinfoweb.aph.gov.au/piweb/Repository/Legis/Sched/Linked/01040401.pdf

The Opposition foreshadowed an amendment to backdate the operation of the Bill to the commencement of the supersplitting amendments (ie 28 December 2002).  However, the amendment was not agreed to by the Government and it was not pressed by the Opposition.

The amendments commence on the 14th day after Royal Assent.  We will provide further advice on the precise date for commencement in future eNews.

Annual Briefing for Members

The Sydney annual briefing for members and new members will be held on Wednesday 19 May.  The annual briefing for Melbourne will be on 25 May.

Matters covered in the briefing will be:

• How to get the best out of the website - Form 6 kits, calculations and precedents;
• A review of court decisions in both the FMS and the Family Court;
• Flow chart to map your way through the super splitting maze (what is sometimes referred to as process mapping);

Registration brochures for Melbourne (25 May) are in the mail and a PDF copy of the brochure for both Sydney and Melbourne is attached

19 March 2004

Commonwealth Schemes

In the previous eNews, we reported that Superannuation Legislation Amendment (Family Law) Bill 2002 was not reached when listed for debate on Wednesday 3 March 2004.  This was the second time that the Bill had been listed and not reached.  Well third time lucky.  The Senate legislation summary for next week (22 March 2004) has the Bill listed for 9.30am on Wednesday 24 March.  For members who want to refresh themselves on the impact of the Bill, go to https://www.supersplitting.com.au/members/commentary.asp  and then log on and go to Law Commentary on the left side of the screen.  It is paper No 1.

Member Briefing

The next member briefing will be in Sydney on 19 May at the Sydney Masonic Centre from 4.00pm to 7.00pm.  Matters we will cover are:
· How to get the best out of the website – Form 6 kits, calculations and precedents;
· A review of court decisions in both the FMS and the Family Court;
· Flow chart to map your way through the super splitting maze.
A flyer will be in the mail shortly and briefings for members in other states are in preparation.
 
 
Self Managed Superannuation
 
If you have a self managed superannuation case, you need to ensure all aspects of the split have been considered, including CGT rollover relief and other tax issues such as the RBL.  We have sent a briefing to the Self Managed Professional Association for publication in its regular newsletter.  A copy is available for members at https://www.supersplitting.com.au/members/commentary.asp  and then log on and go to Law Commentary on the left side of the screen.  It is paper No 6. 

Scheme Specific Factors

There are no new approvals to report in this eNews but there are still some 19 applications in the pipeline, most of these being public sector schemes (7 NSW schemes, 3 NT schemes, 3 Cth schemes, 2 Victorian schemes, 1 SA and 1 WA and 2 private sector schemes).  A full list is on the Family Court website at http://www.familycourt.gov.au/html/superannuation.html
Those of you who have a client in one of the Commonwealth civilian schemes will be aware of the recent approval for the CSS and the PSS.  We have been in touch with ComSuper (remember ComSuper is not the trustee, so don't draft your orders trying to bind ComSuper) and they are not yet ready to provide information for the new method of valuation.  They are not even sure if they will want a new application fee for the new information.  Further details will be provided in our eNews when it comes to hand.

 
26 February 2004

There is further news on the Bill amending the governing legislation of the Commonwealth Superannuation Schemes.  Members will recall there are four Commonwealth schemes you are likely to encounter.  There is the Commonwealth Superannuation Scheme (CSS) now closed to new members and replaced by the Public Sector Superannuation Scheme (PSS).  On the military side, there is the Defence Force  Retirement and Death Benefits Scheme (DFRDB) now closed to new members and replaced by the Military Superannuation and Benefits Scheme (MSBS).  The remaining three schemes were closed some time ago and the remaining members will be quite elderly, so it is unlikely that you will encounter any of these.

Interests in the Commonwealth schemes are all primarily defined benefit interests and the options under the Superannuation Industry (Supervision) Regulations 1994 are not available.  This means that the splitting can only occur on payment to or on behalf of the member.

The Superannuation Legislation Amendment (Family Law) Bill 2002 will cure the problem of splitting only upon payment to the member and will enable a splitting of the underlying interest.  For example, the CSS will provide the non-member with an associate deferred membership in the CSS, payable upon the non-member satisfying a condition of release.  It does not rely on the member satisfying a condition of release as the current arrangements provide.

The Bill is listed for debate in the Senate after 2.00pm on Wednesday 3 March 2004.

Members can see a comprehensive summary of the Bill on the member's site here on the law commentary page

16 January 2004

Superannuation and De Factos

The super splitting amendments do not apply to de facto relationships. However, this will change with the recent moves to refer power to the Commonwealth. Many of you will know that the issue of a reference of power with respect to de facto relationships has been on the political agenda for many years. It seems that things are moving, albeit at glacial pace, towards completion of a reference.

We noticed that there is a Bill on the Commonwealth legislation program entitled Family Law Legislation Amendment Bill (No 1). It is proposed that the Bill be introduced in the forthcoming Autumn session of Parliament (10 February to 1 April). This Bill, among other things, will enable the Commonwealth to act on a reference of power and amend the Family Law Act to enable courts exercising jurisdiction to make orders to make maintenance orders and orders to alter interests in matrimonial property, including superannuation.

How does the reference of power work? It is complex legally as well as politicly. Pl.51(xxxviii) of the Constitution provides that the states may refer a power to the Commonwealth. After political agreement, the referring state must pass an Act to refer the power. Take the NSW Act as an example (we use this because it is the only one so far). Entitled the Commonwealth Powers (De Facto Relationships) Act 2003 (Act No 49 of 2003) it is a short Act containing five (5) sections.

The NSW Act provides that a de facto partner is a person who lives in a de facto relationship. A de facto relationship is a marriage like relationship (other than a legal marriage) between two persons. Financial matters are defined to mean maintenance, distribution of property and distribution of financial resources, including prospective superannuation entitlements. A wide definition of property is included.

Once passed, the Commonwealth can enact amendments to act of the reference. This is the purpose of the Family Law Legislation Amendment Bill (No 1). While not clear, it can be expected that, in the same way as Part VII applies to children of de facto couples, the existing law in Part VIII (Property), Part VIIIA (Financial Agreements) and Part VIIIB (Superannuation) will be applied to de facto relationships.

There is bound to be some tricky questions. Is it a de facto relationship? It may be argued it did not ever start. While bigamy prevents a person being married to two other people, a person can have a de facto relationship with more than one person. Perhaps married to one and in a de facto relationship with another.

How many states have referred power? The best information we can obtain says that five of the six states will make a reference to some degree. A broad reference will be made by:

• New South Wales
• Queensland
• Tasmania

Western Australia will refer power in relation to superannuation only. Victoria is still deciding but will probably refer something. South Australia has refused outright. The joys of a federal system.

What about same sex couples? The NSW Act has a dual reference. It refers power with respect to financial matters relating to the breakdown (it uses that word) of a de facto relationship of persons of different sexes. It also refers power with respect to financial matters relating to the breakdown of a de facto relationship of persons of the same sex. It goes on to say that the references can operate independently. In other words, the Commonwealth can act on the reference relating to persons of different sex but not the reference relating to persons of the same sex. A later Commonwealth Government may act on the reference relating to persons of the same sex.

Can the reference be terminated? Yes. The NSW Act provides a termination mechanism by proclamation. It can occur but it would be unusual in this area.

How will superannuation of a de facto couple be split? We gather that the law as it currently operates for married couples will be applied to de facto couples. Whether the court develops different jurisprudence for de facto couples and married persons relating to contributions and adjustments remains to be seen. We also expect the reference relating to persons of different sexes will be picked up but not same sex couples.

http://www.legislation.nsw.gov.au/maintop/scanact/inforce/NONE/0

24 December 2003

21 October 2003

Do you have a client with an interest in one of the Commonwealth Superannuation Schemes?  There are four schemes which you are likely to encounter.  There is the Commonwealth Superannuation Scheme (CSS) now closed to new members and replaced by the Public Sector Superannuation Scheme (PSS).  On the military side, there is the Defence Force  Retirement and Death Benefits Scheme (DFRDB) now closed to new members and replaced by the Military Superannuation and Benefits Scheme (MSBS).  The remaining three schemes are closed schemes and the remaining members will be quite elderly, so it is unlikely that you will encounter any of these.

If you have a client in any of these schemes, you will be aware that the interests are all primarily defined benefit interests and the options under the Superannuation Industry (Supervision) Regulations are not available.  This means that the splitting can only occur on payment to or on behalf of the member.

All of these schemes are now the subject of an amending Bill - the Superannuation Legislation Amendment Bill 2002.  This Bill will cure the problem of splitting only upon payment and will enable a splitting of the underlying interest.  For example, the CSS will provide the non-member with an associate deferred membership in the CSS, payable upon the non-member satisfying a condition of release.  It does not rely on the member satisfying a condition of release as the current arrangements provide.

The Bill passed the House of Representatives on 14 May 2003 and is presently before the Senate.

18 July 2003:

Are you drafting your orders for the splitting of superannuation in the correct manner?  In a recent case the court rejected an application for consent orders where the practitioners had not drafted the orders to comply with the legislative requirements.

For a discussion of the case go to the member's area at case summaries

27 June 2003:

The Commonwealth Special Gazette dated 27 June 2003 contains a determination under subregulation 45D(4) of the Family Law (Superannuation) Regulations 2001 by the Australian Government Actuary.  The determination publishes the interest rate for adjustments to the base amount where the superannuation interest is a defined benefit interest or an interest in a self managed superannuation fund.

The interest is calculated on a daily basis having regard to the annual rate of 7.1%.  The previous period had an interest rate of 7.4%.

For a copy of the Special Gazette and other legislation go to our legislation links