This article will discuss the general provisions about payment splitting under Sections 90XV to 90XZC of the Family Law Act 1975. The FLA governs the financial arrangements between divorcing couples in Australia, including property division and spousal maintenance.
Under the Act, payment splitting applies to superannuation funds, a form of retirement savings. The law treats superannuation funds as property for property division in divorce settlements. Payment splitting allows a divorcing couple to divide their superannuation funds between them rather than having to cash them out and divide the proceeds.
Section 90XV: Court May Cancel Payment Split
One of the general provisions about payment splitting is Section 90XV, which stipulates the instances when the court may cancel a payment split. The court may order to terminate a payment split if:
- the superannuation agreement in respect of the payment split has ceased to be in force
- the non-member spouse has not served a waiver notice on the trustee under section 90XZA regarding the payment split.
Moreover, Section 90XW provides that any reduction that the trustee can make from a splittable payment must be taken before computing any payment split and using section 90XX.
Section 90XX: Multiple Payment Splits Applying to the Same Splittable Payment
What if there are multiple payment splits applying to the same splittable payment? This section recommends that if two or more payment splits apply to the same splittable payment:
- The payments splits will be calculated in order of their operative times, starting with the earliest time.
- There will be a reduction of the amount of the splittable payment by the amount to which a person other than the member spouse is entitled under the payment split with the next earlier operative time.
Section 90XZ: Superannuation Preservation Requirements
- Regulated superannuation fund or approved deposit fund. The non-member spouse’s entitlement is subject to any regulations made under the Superannuation Industry (Supervision) Act 1993 (SIS).
- Retirement savings account (RSA). The non-member spouse’s entitlement is subject to any regulations made under the Retirement Savings Accounts Act 1997.
- Constitutionally Protected Fund or an exempt public sector superannuation scheme. The non-member spouse’s entitlement is subject to any law or other instrument.
The SIS and RSA Acts provide for payment of that entitlement to a:
- regulated superannuation fund
- approved deposit fund
- retirement savings account, or
- exempt public sector superannuation scheme within the meaning of the SIS Act for the benefit of the non-member spouse.
Section 90XZA: Waiver of Rights Under Payment Split
Can there be a waiver of your rights under payment split? This section provides for the rules on such waiver:
- For any splittable payment that falls due after the date mentioned in the waiver notice, the following rules apply if the non-member spouse serves a waiver notice regarding a payment split to the trustee:
- The non-member spouse need not be paid any amount under the payment split in respect of the splittable payment
- The entitlement of the person to whom the splittable payment would have been made but for the payment split is reduced in the same way that it would have been reduced if the non-member spouse’s entitlement had not been terminated.
An example of this rule is: X has a superannuation interest subject to a 50:50 payment split in favour of Y. Y serves a waiver notice on the trustee in exchange for a lump sum payment made by the trustee to another fund for the benefit of Y. The effect is that X’s payments will continue to be reduced by half, but Y will receive no further payments under the payment split.
Do Parties Require a Form for the Waiver?
Yes. The waiver notice must be in the prescribed form and must include attachments such as:
- a statement that stipulates that a prescribed financial adviser gave independent financial advice as to the financial effect of the waiver notice to non-member spouse; and
- a certificate signed by the person who provided the financial advice, stating that the advice was provided.
Section 90XZB: Trustee to Provide Information
Section 90XZB allows an eligible person to make an application to the trustee of an eligible superannuation plan for information about a superannuation interest of a member of the plan.
An eligible person is:
- the member of the plan;
- the spouse or former spouse of the member;
- a child of the member;
- a person who has applied to the court for a property settlement order in relation to the member; or
- a legal practitioner acting for any of the above persons.
Moreover, the eligible person must include these attachments to the application:
- A declaration stating that the applicant requires the information for either or both of the following purposes:
- to assist the applicant to negotiate a superannuation agreement properly; and
- to assist the applicant in connection with superannuation interests.
- The fee (if any) is payable under regulations for section 90XY. This Section states that trustees may charge reasonable fees concerning the following:
- a payment split
- a superannuation interest
What if the Fee Remained Unpaid?
If there was no payment of such fee by the due date, the trustee may recover the unpaid amount by deducting it from amounts that would otherwise become payable to the person obligated to pay the fee by the trustee regarding the superannuation interest.
Other Rules under Section 90XB:
- The trustee shall keep the member’s address private in response to an application made under this section by the member’s spouse.
- If the trustee receives an application under this section from someone other than the member, the trustee need not notify the member.
- The regulations may require the trustee of an eligible superannuation plan to communicate information about the superannuation interest to the non-member spouse after the operative period for a payment split.
Section 90XZC: Death of Non-member Spouse
This section lays out the effects of the death of a non-member spouse. If the non-member spouse dies after the operative time (beginning of the fourth business day after the day on which a copy of the agreement is served on the trustee) for a payment split:
- the payment split continues to operate
- the payment split operates in favour of the legal personal representative of the deceased spouse and is binding on that legal personal representative
- the legal personal representative has all the rights the deceased spouse would have had regarding the payment split, including the right to serve a waiver notice under section 90XZA.
Speak to a Family Lawyer As Soon As Possible
If you are facing payment splitting issues under the Family Law Act 1975 Australia, it is important to speak to a lawyer as soon as possible. JB Solicitors can help you by:
- Giving advice on your rights and obligations under the FLA, including their right to request payment splitting and challenge a payment splitting order.
- Helping you gather evidence relevant to your payment splitting case, such as bank statements, pay stubs, and tax returns.
- Negotiating with the other party to try to reach an agreement that is in your best interests
- Representing clients in court if the parties cannot reach a settlement.
We can help you to understand your rights and obligations and protect your interests. Contact us today.