Superannuation splitting on separation: how it works, the forms, and a worked example

When a couple separates, superannuation is treated as property and can be divided under Part VIIIB of the Family Law Act 1975. The split is made either by a court order (usually consent orders) or by a superannuation agreement inside a binding financial agreement. A split does not release cash: the amount moves from one party's super interest to a new or existing account for the other, and it stays preserved until that person meets a condition of release such as retirement. Each fund must be notified as the procedure requires, the order or agreement must be served on the fund trustee, and funds may charge fees for providing information and implementing the split. Since 28 September 2022, de facto couples in Western Australia can also split super under Part VIIIC of the federal Act.

General information only. Super splitting documents are technical: errors are common and costly to fix.

How a split is worked out

1. Find out each interest's value. Use the superannuation information request form (prescribed under the Family Law (Superannuation) Regulations 2001) with the fund's Form 6 declaration, or ask the court to request information. Funds can charge a fee for this information.
2. Include the value in the property pool alongside the home, savings and debts.
3. Decide the split as part of the overall settlement, using the section 79 steps.
4. Draft the splitting order or agreement using a base amount (a dollar amount, adjusted by the fund's rules) or a percentage of the interest (more common for defined benefit schemes).
5. Give the fund procedural fairness notice (for an order, the fund generally must be served with the proposed orders and given the opportunity to object before the court makes them).
6. Serve the sealed order on the fund. The fund implements the split within its time limits.

Accumulation versus defined benefit

Defined benefit interests are where the largest valuation mistakes occur: the "family law value" can differ significantly from what the member statement shows. Get the formal valuation.

Splitting orders, flags and agreements

• Splitting order: made by the court, usually by consent.
• Splitting agreement: part of a binding financial agreement, with each party's independent legal advice.
• Flagging order or flagging agreement: freezes payments from the interest until a later split or the flag is lifted. Useful when a member is close to retirement and the value is uncertain.

Tax

A family law super split is not a taxable event in itself. The split amount keeps the tax components (tax-free and taxable) in proportion, and is credited to the receiving spouse's account. Contribution caps generally do not apply to the split. Tax arises later, when the receiving spouse withdraws or the benefit is paid on death, under the normal rules.

Worked example (illustrative)

Using the property settlement worked example family but changing the facts: Sarah and James sell the home, and the net pool of $1,080,000 includes James's accumulation super of $265,000 and Sarah's $88,000.

• Agreed division: 58/42 in Sarah's favour. Sarah's entitlement is $626,400 and James's is $453,600.
• Non-super assets: $727,000 (house equity of $630,000 before selling costs, shares, cars and bank accounts, less the credit card debt).
• Sarah keeps her own $88,000 super, so she needs $538,400 more from the non-super assets, a super split, or both.

Option B gives James more cash and less super, and gives Sarah less cash. Which suits depends on housing needs: Sarah may need cash for a deposit, while James may prefer liquid assets. In option B the splitting order would use a base amount of $78,400, which the regulations adjust for the period between the order and the date the split takes effect.

Use the split calculator to get each party's total, then allocate assets until both totals match. Selling costs and tax on non-super assets should be allowed for in a real case.

Fees and timing

Funds may charge fees to provide information and to split an interest. Fees vary between funds, and some funds charge nothing; check the fund's product disclosure statement or fees page. Funds must act on a splitting order within time limits set by the regulations. Delays usually come from incorrect fund names, member numbers or missing procedural fairness steps.

WA de facto couples

Before 28 September 2022, when the Family Law Amendment (Western Australia De Facto Superannuation Splitting and Bankruptcy) Act 2020 commenced, WA de facto couples could not split super, because their property disputes are dealt with under WA law. Part VIIIC of the Family Law Act now allows the Family Court of WA to make super splitting orders for de facto couples, and lets WA financial agreements deal with super. The standard application period is 2 years after the relationship ended (s 44(7)).

FAQ

Can I get my share of super as cash?

Not unless you have met a condition of release, such as retirement after preservation age, or qualify for limited early release. The split money stays in super.

Does a super split affect my contribution caps?

Generally no: the split amount is not a contribution for cap purposes.

What if my former partner's fund is an SMSF?

The SMSF trustees must implement the split. If both of you are trustees, the trust deed and SMSF rules on a member leaving the fund also matter.

Should I split super or take other assets?

It depends on your age, housing needs and other assets. Super is preserved and taxed differently, so $1 of super is not always worth $1 of house equity.

Sources

• Federal Register of Legislation — Family Law Act 1975 Parts VIIIB and VIIIC; Family Law (Superannuation) Regulations 2001
• Federal Circuit and Family Court of Australia — superannuation information kit and forms
• Family Court of Western Australia — WA de facto super splitting
• Australian Taxation Office — tax on family law super splits
• Related: checklist, de facto relationships, divorce and consent orders