Bills Digest No. 19 2002-03
Family Law Legislation Amendment (Superannuation)
(Consequential Provisions) Bill 2002
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage History
Purpose
Background
Main Provisions
Endnotes
Contact Officer & Copyright Details
Passage History
Family Law Legislation Amendment
(Superannuation) (Consequential Provisions) Bill
2002
Date Introduced:
27 June 2002
House: House of Representatives
Portfolio: Attorney-General
Commencement:
On Royal assent,
however, Schedules 1, 2, 3, and 4 commence immediately after the
commencement of the Family Law Legislation Amendment
(Superannuation) Act 2001, which is expected to commence in
the second half of 2002 (and on 28 December 2002 if not proclaimed
earlier).(1)
To ensure the
appropriate treatment of Government income streams when a
superannuation interest is split on marriage breakdown by amending
the following Acts:
-
- Family Law Act 1975
-
- Judges' Pensions Act 1968
-
- Social Security Act 1991, and
-
- Veterans' Entitlements Act 1986.
On 18 June 2001, Parliament passed the
Family Law Legislation Amendment (Superannuation) Act
2001. When this Act commences operation (on 28 December 2002
if not proclaimed earlier) superannuation interests will be able to
be divided on marriage breakdown either by agreement or court
order. The amendments contained in the Family Law Legislation
Amendment (Superannuation) Act 2001 are discussed in detail in
Bills Digest No. 55 2000-01, Family Law Legislation Amendment
(Superannuation) Bill 2000.(2)
The Government also made consequential
amendments to relevant taxation legislation to ensure that
appropriate tax treatment is applied to superannuation interests
split as a consequence of marriage breakdown. The details of these
consequential amendments are discussed in detail in Bills Digest
No. 40 2001-02, Family Law Legislation Amendment
(Superannuation) (Consequential Provisions) Bill
2001.(3)
Further legislative changes were required to
enable a superannuation interest to be divided on marriage
breakdown. That was achieved through the gazetting of the Family
Law (Superannuation) Regulations 2001(4) and the
Superannuation Industry (Supervision) Amendment Regulations 2001
(No. 3) 2001.(5)
The amendments in this Bill make consequential
amendments to ensure that superannuation interests split under a
family law settlement are assessed under social security and
veteran's affairs legislation consistently with the current
assessment of other income and assets under the means test.
Schedule 1 Amendment of the Family Law Act 1975
Item 1 inserts a new definition
of reversionary beneficiary into proposed
subsection 90MD. The new definition ensures that,
for the purposes of Part VIIIB of the Family Law Act 1975,
the term includes a person who receives any benefit on the death of
a member spouse. This definition is broader than the finance
industry's commonly used meaning (a recipient of an on-going
pension or commuted lump sum).
Item 2 amends
proposed subsection 90MX(3) to
clarify the order of precedence where the one superannuation
interest is subject to successive splits. In most situations, a
person remarries someone other than the person they have divorced.
The legislation currently anticipates the division of
superannuation interests where a superannuation fund member has
divorced more than once. The amendment clarifies the application of
this provision to the (unusual, but possible) situation where
parties to a marriage divorce, split their superannuation, re-marry
their original spouse, and subsequently separate from the spouse
and for a second time wish to split their superannuation.
Schedule 2 Amendment of the Judges' Pensions Act
1968
Item 1 inserts
new subsection 21(2) of the
Judges' Pensions Act 1968. The new subsection provides an
express power to make regulations to prescribe accrued benefit
multiples for the purpose of Part VIIIB of the Family Law Act
1975. Where a pension is split under the Family Law Act
1975 following a marriage breakdown, the Regulations provide
for a method of determining the accrued benefit multiple consistent
with the governing rules of the superannuation fund. The
Judges' Pensions Act 1968 does not provide for calculating
accrued benefit multiples. The new subsection will provide for a
method to be included in Regulations.
Schedule 3 Amendment of the Social Security Act
1991
This schedule makes amendments to ensure that
income stream payments from superannuation funds that have been
split under Part VIIIB of the Family Law Act 1975 be
treated consistently with other income and assets under the social
security means test.
Items 12 and
13 insert new
subparagraphs 9A(2)(h)(iva) and
9B(2)(h)(iva) respectively. The amendments enable
superannuation income streams (pensions or annuities) paid to a
spouse or former spouse in the form of a commutation following a
superannuation split under the Family Law Act 1975 to
retain their assets test exemption under the social security means
test.
Item 14 inserts new
sections 9C and 9D into
the Social Security Act 1991. New
section 9C contains definitions for the following
terms:
-
- "Original family law affected income stream" means an income
stream purchased by a superannuation fund member from a
superannuation fund
-
- "Primary family law affected income stream" means that part of
the "original family law affected income stream" paid to the member
of the superannuation fund under a payment split under Part VIIIB
of the Family Law Act 1975
-
- "Secondary family law affected income stream" means that part
of the "original family law affected income stream" paid to the
member's spouse or former spouse (non-superannuation fund member)
under a payment split under Part VIIIB of the Family Law Act
1975
-
- "Family law affected income stream" means "primary family law
affected income stream" and "secondary family law affected income
stream."
New section 9D
provides that where there is a "primary family law affected income
stream" that meets the requirements of an asset tested income
stream (long or short term) under the Social Security Act
1991, the "secondary family law affected income stream" will
also meet those requirements. Where there is no "primary family law
affected income stream," the "secondary family law affected income
stream" is treated in the same manner as the "primary family law
affected income stream," if there had been one.
Item 20 amends the provisions
in the Social Security Act 1991 that apply the income test
to "family law affected income streams." New
sections 1099DB and 1099DC
provide that where a "family law affected income stream" is an
assets test exempt income stream or, assets test exempt income
stream (long term), under the Act the income streams will be taken
to be received according to guidelines made by the Secretary.
New section
1099DD provides that the Secretary's guidelines are
disallowable instruments under the Acts Interpretation Act
1901.
Schedule 4 Amendment of the Veterans' Entitlements Act
1986
This schedule makes amendments to ensure that
income stream payments from superannuation funds that have been
split under Part VIIIB of the Family Law Act 1975 be
treated consistently with other income and assets under the social
security means test.
Items 12 and
13 insert new
subparagraphs 5JA(2)(h)(iva) and
5JB(2)(h)(iva) respectively. The subparagraphs
enable superannuation income streams (pensions or annuities) paid
to a spouse or former spouse in the form of a commutation following
a superannuation split under the Family Law Act 1975 to
retain their assets test exemption under the veterans' entitlements
means test.
Item 14 inserts new
sections 5JC and 5JD into the
Veterans' Entitlements Act 1986. New
section 5JC contains the following
definitions:
-
- "Original family law affected income stream" means an income
stream purchased by a superannuation fund member from a
superannuation fund.
-
- "Primary family law affected income stream" means that part of
the "original family law affected income stream" paid to the member
of the superannuation fund under a payment split under Part VIIIB
of the Family Law Act 1975
-
- "Secondary family law affected income stream" means that part
of the "original family law affected income stream" paid to the
member's spouse or former spouse (non-superannuation fund member)
under a payment split under Part VIIIB of the Family Law Act
1975.
-
- "Family law affected income stream" means "primary family law
affected income stream" and "secondary family law affected income
stream."
New section
5JD provides that where there is a "primary family law
affected income stream" that meets the requirements of an asset
tested income stream (long or short term) under the Veterans'
Entitlements Act 1986, the "secondary family law affected
income stream" will also meet those requirements. Where there is no
"primary family law affected income stream," the "secondary family
law affected income stream" is treated in the same manner as the
"primary family law affected income stream," if there had been
one.
Item 20 amends the provisions
in the Veterans' Entitlements Act 1986 that apply the
income test to "family law affected income streams."
New sections 46ZA and
46ZB provide that where a "family law affected
income stream" is an assets test exempt income stream or, assets
test exempt income stream (long term), under the Act the income
streams will be taken to be received according to guidelines made
by the Repatriation Commission.
New section
46ZC provides that the Repatriation Commission's
guidelines are disallowable instruments under the Acts
Interpretation Act 1901.
- Attorney-General's Department, Family Law and Legal Assistance
Division, http://www.ag.gov.au/superannuation/welcome.html
.
- This Digest can be accessed via the following link: http://www.aph.gov.au/library/pubs/bd/2000-01/01BD055.PDF
- This Digest can be accessed via the following link: http://www.aph.gov.au/library/pubs/bd/2001-02/02bd040.pdf
.
- See http://www.ag.gov.au/superannuation/second/family_lawregs.htm
.
- See http://scaleplus.law.gov.au/html/numrul/18/9289/top.htm
.
David Kehl
20 August 2002
Economics, Commerce and Industrial Relations Group
Information and Research Services
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ISSN 1328-8091
© Commonwealth of Australia 2002
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