William Fettes, director at DBA Lawyers, says major changes to the Family Law Act gained royal assent on 10 December 2024, including ones that will affect orders and financial agreements that involve superannuation.
“A lot of the changes go into effect soon so it’s important to know what’s coming and what is covered by the new laws, but also for existing proceedings prior to 10 June, unless they’ve been finally determined, or where there is a final hearing underway,” Fettes said.
“One of the things right out of the gate is the parity between orders and financial agreements that involve superannuation agreements where there may not have been a 12-month separation period.”
Fettes said for SMSFs where they have superannuation interests that are above the low rate cap threshold, there was previously a strict requirement that to fulfill the separation declaration requirements associated with the superannuation agreement, that there had to have been a 12-month separation.
“If you couldn’t do that, you were forced into going to the family court process via court orders or minutes of consent rather than using a financial concept,” he said.
“That was a bit of an antiquated approach and doesn’t really have ongoing relevance, where for most taxpayers the preservation age is now 60 plus, so there’s tax spin on the low rate cap in terms of accessing benefits before 60. Fortunately, that’s now been tidied up and it’s one of the provisions that has already come into effect in the Family Law Act a day after Royal Assent.”
He continued that from 11 December last year, section 90XQ of the Family Law Act no longer applies and associated provisions in 90XP are also no longer there, meaning there is now parity between getting orders and getting a superannuation agreement.
The FLA changes would also impact orders in relation to property settlement which Fettes said reflect codification of principles from case law that have emerged in relation with how these issues are to be handled.
“From 10 June, the courts will be identifying each party’s legal and equitable rights and interest in any property and looking particularly at their liabilities a bit more closely in a defined way,” Fettes said.
“They’ll be considering what each party contributed to the relationship before, during and after, and then they’ll use that as a baseline for allocating overall percentage entitlement to the parties based on their default contributions based on the first point. Additionally, they’ll look at the party’s current and future circumstances with a few particular avenues.”
Following this, the courts would potentially depart from the assessment of the contributions-based entitlements and make an adjustment in favour of one party or the other to take into account those current and future circumstances.
“The court orders can make allocations of specific property finances and liabilities to the parties to implement that kind of approach for the property settlement. This is a much more prescribed process for achieving a property settlement, although, again, it is intended to be aligned with some of the case law principles,” he said.
“Some of the things the courts might consider in relation to the party’s current and future circumstances is wastage, which I thought was interesting – parties intentionally or recklessly causing material wastage of property or financial resources.”
“If parties have incurred any liabilities, the courts are permitted to consider the nature of liabilities and the circumstances relating to them, and the impact of those liabilities on the future of the parties’ housing needs. This is expanding existing approaches that are based on particularly the care of children under 18, and allowing the court to consider the need of either party to provide appropriate housing for such a child.”
