Federal Register of Legislation - Australian Government

Primary content

Principles as made
These Principles allow split superannuation interests to be assessed consistently with other income and assets under the social security means test.
Administered by: Social Services
Registered 28 Nov 2011
Tabling HistoryDate
Tabled HR07-Feb-2012
Tabled Senate07-Feb-2012

EXPLANATORY STATEMENT

 

Social Security (Family Law Affected Income Streams) (FaHCSIA) Principles 2011

 

Summary

 

Amendments made in recent years to the Family Law Act 1975 allow superannuation interests to be split pursuant to a family law property settlement.  These Principles will allow these split interests to be assessed consistently with other income and assets under the social security means test.

 

Background

 

These Principles are made as a consequence to the provisions of the Family Law Legislation Amendment (Superannuation) Act 2001 (the Super Act). This Act received Royal Assent in June 2001, and provides for more equitable treatment of superannuation entitlements for separating couples. Complementary legislation to amend provisions relating to tax and superannuation regulatory provisions was enacted via the Family Law Legislation Amendment (Superannuation) (Consequential Provisions) Act 2001.

 

The Super Act gives the Family Court, or parties to a property settlement, the ability to divide superannuation entitlements. This may be by either splitting the superannuation during either the ‘growth phase’ or ‘payment phase’, or by ‘flagging’ superannuation in the growth phase so that the trustee is prevented from distributing the superannuation until further agreement is reached. A superannuation interest may be ‘split’ pursuant to either a superannuation agreement between two divorcing or separating parties or a court order requiring a particular split of the superannuation interest.

 

Explanation of the Provisions

 

Part 1 – Preliminary

 

Section 1.1 of the Principles states the name of the Principles.

 

Section 1.2 sets out that the Principles commence on the day after registration on the Federal Register of Legislative Instruments.

 

Section 1.3 provides definitions of terms used in the Principles.

 

Section 1.4 specifies that the decision-making principles set out in this instrument are made under a number of provisions in the Social Security Act 1991 (the Act).

 


 

 

Part 2 – Income from asset-test exempt income streams

 

Section 2.1 provides that Part 2 applies to a family law affected income stream (defined at section 9C of the Act) that is an asset-test exempt income stream (defined at subsection 9(1) of the Act).  Such an income stream may either be a defined benefit income stream (defined at subsection 9(1F) of the Act) or a non-defined benefit income stream.

 

Section 2.2 applies to an asset-test exempt family law affected income stream that is not a defined benefit income stream.  This section prescribes the matters that the Secretary must have regard to in making a decision under paragraph 1099DB(1)(a) of the Act, that is, the annual rate of ordinary income that an income support recipient is taken to have received from one of these income streams in a year.  In making such a decision, the Secretary must take into account the matters listed in items 1 to 10 and 14 to 23 of Schedule 1 of the Principles as well as any other matter that the Secretary considers relevant.  Where the income support recipient is receiving income from the income stream as a result of more than one payment split, the Secretary must have regard to those same matters in regard to each payment split.

 

Section 2.3 applies to an asset-test exempt family law affected income stream that is a defined benefit income stream.  This section prescribes the matters that the Secretary must have regard to in making a decision under paragraph 1099DB(1)(b) of the Act, that is, the annual rate of ordinary income that an income support recipient is taken to have received from one of these income streams in a year.  In making such a decision, the Secretary must take into account the matters listed in items 1 to 12 and 14 to 23 of Schedule 1 as well as any other matter that the Secretary considers relevant.  Where the income support recipient is receiving income from the income stream as a result of more than one payment split, the Secretary must have regard to those same matters in regard to each payment split.

 

Part 3 – Income from asset-test income streams (long term)

 

Section 3.1 provides that Part 3 applies to a family law affected income stream (defined at section 9C of the Act) that is an asset-tested income stream (long term) (defined at subsection 9(1) of the Act).  Such an income stream may either be a defined benefit income stream (defined at subsection 9(1F) of the Act) or a non-defined benefit income stream.

 


Section 3.2 applies to an income stream that is both an asset-tested income stream (long term) and a family law affected income stream but is not a defined benefit income stream.  This section prescribes the matters that the Secretary must have regard to in making a decision under paragraph 1099DC(1)(a) of the Act, that is, the annual rate of ordinary income that an income support recipient is taken to have received from one of these income streams in a year.  In making such a decision, the Secretary must take into account the matters listed in items 1 to 10 and 13 to 23 of Schedule 1 as well as any other matter that the Secretary considers relevant.  Where the income support recipient is receiving income from the income stream as a result of more than one payment split, the Secretary must have regard to those same matters in regard to each payment split.

 

Section 3.3 applies to an income stream that is both an asset-tested income stream (long term) and a family law affected income stream and is also a defined benefit income stream.  This section prescribes the matters that the Secretary must have regard to in making a decision under paragraph 1099DC(1)(b) of the Act, that is, the annual rate of ordinary income that an income support recipient is taken to have received from one of these income streams in a year.  In making such a decision, the Secretary must take into account the matters listed in items 1 to 23 of Schedule 1 as well as any other matter that the Secretary considers relevant.  Where the income support recipient is receiving income from the income stream as a result of more than one payment split, the Secretary must have regard to those same matters in regard to each payment split.

 

Part 4 – Asset value of asset-tested income stream

 

Section 4.1 provides that Part 4 applies to a family law affected income stream (defined at section 9C of the Act) that is an asset-tested income stream (long term) or an asset-tested income stream (short term) (both defined at subsection 9(1) of the Act).  Such an income stream may either be a defined benefit income stream (defined at subsection 9(1F) of the Act) or a non-defined benefit income stream.

 

Section 4.2 applies to an income stream that is both an asset-tested income stream (long term) or an asset-tested income stream (short term) and a family law affected income stream but is not a defined benefit income stream.  This section prescribes the matters that the Secretary must have regard to in making a decision under subsection 1120A(2) of the Act, that is, deciding what the value of one of these income steams is for asset-testing purposes in relation to the income support recipient.  In making such a decision, the Secretary must take into account the matters listed in items 1 to 23 of Schedule 1 as well as any other matter that the Secretary considers relevant.  Where the income support recipient is receiving income from the income stream as a result of more than one payment split, the Secretary must have regard to those same matters in regard to each payment split.

 


Section 4.3 applies to an income stream that is both an asset-tested income stream (long term) or an asset-tested income stream (short term) and a family law affected income stream and is also a defined benefit income stream.  This section prescribes the matters that the Secretary must have regard to in making a decision under subsection 1120A(3) of the Act, that is, deciding what the value of one of these income steams is for asset-testing purposes in relation to the income support recipient.  In making such a decision, the Secretary must take into account the matters listed in items 1 to 23 of Schedule 1 as well as any other matter that the Secretary considers relevant.  Where the income support recipient is receiving income from the income stream as a result of more than one payment split, the Secretary must have regard to those same matters in regard to each payment split.

 

Schedule 1 – Matters to which the Secretary must have regard

 

This schedule sets out the specifics of the matters that the Secretary must have regard to in making a decision under paragraphs 1099DB(1)(a) or (b), paragraphs 1099DC(1)(a) or (b) or subsections 1120A(2) or (3) of the Act.  The Secretary will only have regard to such of the matters listed as are specified in this Instrument for the purposes of paragraphs 2.2(2)(a), 2.3(2)(a), 3.2(2)(a), 3.3(2)(a), 4.2(2)(a) and 4.3(2)(a).  There are 23 matters listed that the Secretary may, potentially, be required to have regard to in making one of these decisions. 

 

Consultation

Consultation regarding these Principles was undertaken with the Department of Education, Employment and Workplace Relations, and the Department of Veterans’ Affairs, to ensure a co-ordinated approach in respect of welfare payments for which they have responsibility.

Regulation Impact Statement

There was no requirement to prepare a Regulation Impact Statement in regard to the Determination, as this measure is not likely to have a direct, or a substantial indirect, effect on business and is not likely to restrict competition.