A Win For De Facto Partners: Superannuation Splitting In Western Australia

On 28 September 2022, amendments to the Family Law Act 1975 (Cth) (FLA) took effect in relation to superannuation splitting for de facto couples in Western Australia.¹  

These amendments gave parties to de facto relationships in Western Australia the opportunity to seek superannuation splitting orders following the breakdown of their relationship.  This was not previously possible for de facto partners in Western Australia.  The amendments granted de facto couples the same right to seek superannuation splitting orders that other couples throughout the rest of Australia, whether married or de facto, were entitled to.

WHAT ARE SUPERANNUATION SPLITTING ORDERS?

Superannuation splitting orders are court orders that are used to divide parties’ superannuation entitlements.  These orders compel a superannuation fund to cause the transfer of one party’s superannuation entitlements to a superannuation account held by the other party.

BENEFITS OF THIS CHANGE

Prior to the introduction of these amendments, separated de facto partners in Western Australia could only seek limited superannuation orders.  These were generally to the effect that each party retain their respective superannuation entitlements.  Parties to de facto relationships can now seek orders that one de facto spouse pays to the other, some or all of their superannuation entitlements.

This has been an option for separating married couples in Western Australia for a significant period of time.  At times, not being able to split superannuation resulted in unfair outcomes for de facto couples in Western Australia when compared to those of married couples or de facto couples in the rest of Australia.

For example:

• Superannuation is often one of the most significant portions of a person’s (or a couple’s) net wealth. 

• It is often the case that one spouse (whether de facto or married) holds greater superannuation than the other.  This arises as, commonly, one spouse is the primary income earner, while the other is the primary homemaker and/or parent.  On average, women have less superannuation than men.²   

• In order to overcome the inability to split superannuation, the Family Court of Western Australia and family law practitioners may have previously attempted to offset one parties’ greater superannuation entitlements, by attempting to provide the other party with a greater share of the other non-superannuation assets. 

• In reality, this offsetting exercise was not always possible or practical, particularly in circumstances such as:

  • the de facto couple’s ‘pool’ of assets comprised little in the way of other assets; or

  • the other main asset was a home which held little ‘equity’ due to a large mortgage; or

  • the party with the more modest superannuation entitlements was not in a position to retain the home as they did not have the income necessary to refinance or service the mortgage.

Put simply, it was often the case that there was not enough other assets to offset one de facto spouse’s substantial superannuation entitlements and women were disproportionately negatively affected by this.³

The amendments to the Family Law Act 1975 (Cth) (FLA) were welcome changes for de facto couples and family lawyers in Western Australia.  The ability to split superannuation provides another avenue for separating de facto couples to structure outcomes with the same flexibility and equality that separating married couples in Western Australia, and de facto couples in other States, have long experienced. 

Our Family Law team can assist you with all matters related to de facto separation, including providing you with further information in relation to superannuation splitting orders for de facto couples in Western Australia. 

Thank you to Emily O’Keeffe, Law Graduate, for her valuable research and assistance with this article.