Following its announcement last year that will it review whether superannuation assets should be available to pay compensation or restitution to victims of crime, the government has now released two draft proposals.
Minister for Revenue and Financial Services Kelly O’Dwyer said that the first proposal is a clawback mechanism for out-of-character superannuation contributions made by criminals to shield their assets from use in compensating victims of their crimes.
“The second is to allow victims of serious, violent crimes to be able to access a perpetrator’s superannuation as compensation, where other assets have been exhausted, subject to appropriate limits and thresholds,” said Ms O’Dwyer.
In the consultation paper, Treasury stated that this second measure will only apply where a criminal conviction has been obtained.
“It would not apply to unpaid civil compensation claims in the absence of a prior criminal conviction,” the paper said.
The consultation paper also suggested that access to a perpetrator’s entire superannuation balance should only be possible in respect of unpaid compensation orders relating to serious criminal offences involving violence against an individual.
“It is also proposed that a serious criminal offence should be defined as one with a maximum custodial sentence above 10 years,” the paper explained.
While the consultation paper has proposed that only primary victims should be able to make a claim, as opposed to secondary victims, Treasury is still seeking feedback on whether close family members or financial dependants should be able to access the perpetrator’s superannuation where the victim died as a result of the act of violence.
The paper also noted that many stakeholders were concerned about the rights of the perpetrator’s dependants and the impact on dependants of allowing victims of crime access to a perpetrator’s superannuation.
“Stakeholders generally supported the primacy of the family law process over access by victims of crime. It was argued that family law processes should be completed first so that victims are compensated by the perpetrator and not their dependants,” the consultation paper said.
Where the perpetrator has dependants, the consultation paper is seeking feedback on two potential options.
The first option is to allow 50 per cent of the perpetrator’s total superannuation balance up to $1.6 million, plus any amount in excess of $1.6 million, to be available as an aggregate limit for any compensation claims arising out of a conviction.
The second option is to have no explicit limits on access for compensation claims but ensuring family law proceedings can interrupt claims to allow potential family law splitting prior to any payment to the court.
The other measure proposed in the paper, the clawback mechanism, will apply more broadly to compensation orders that have not been paid in full flowing from any indictable offence, as it only related to out-of-character contributions and not the perpetrator’s entire superannuation balance.
Treasury is seeking feedback on two options for determining whether a contribution is out of character.
The first option is for a court or superannuation trustee to apply a subjective assessment of whether contributions are “out of character” and therefore available for compensation.
The second is for all voluntary contributions by or on behalf of the member to be deemed “out of character” and therefore available for compensation.
Stakeholders have been invited to comment on the draft proposals by 15 June 2018.
