This article will outline different provisions for payment splitting or flagging by court order in the Family Law Act 1975. Divorce or separation can lead to complex financial issues. This especially happens when it comes to dividing assets and property between the separated/divorced parties. One crucial component often subject to scrutiny is superannuation interests. These are funds that parties set aside for retirement.
Courts have the authority to issue orders related to payment splitting or flagging in such cases. This is to ensure fair and equitable distribution.
Payment splitting involves dividing superannuation interests between spouses, ensuring that each party receives a fair share of the accumulated funds. On the other hand, flagging orders protect one spouse's interests by preventing the trustee from making certain payments without the court's permission.
These legal mechanisms play a significant role in the financial resolution of divorce proceedings. Read on to learn more about different provisions in the different sections about payment splitting or flagging by court order.
Section 90XS: Order Under Section 79 or 90SM May Include Orders in Relation to Superannuation Interests
Section 90XS outlines proceedings concerning the property of spouses, particularly in relation to superannuation interests. Here is the explanation of each subsection:
(1) In proceedings conducted under either section 79 or 90SM, court has authority to make orders on superannuation interests of spouses. The provisions in this specific division of the legislation govern the court's power to make these orders.
Note 1: This note clarifies that although the court makes orders in accordance with this division, they will issued them under either section 79 or section 90SM.
2: It highlights that sections 71A and 90XO place limitations on the scope of section 79.
3: Similarly, this note mentions that subsections 44(5) and (6), as well as sections 90SB, 90SK, and 90XO, limit the scope of section 90SM. These subsections and sections impose specific constraints or conditions on the application of section 90SM.
(2) This subsection states that a court cannot make an order under section 79 or section 90SM in relation to a superannuation interest unless they do so in accordance with the relevant part of the legislation. In other words, court must adhere to specific provisions outlined in this Part to make any order for superannuation interest.
Section 90XT: Splitting Order
Section 90XT of payment splitting or flagging by court order addresses the powers of a court. This is regarding powers in relation to superannuation interests in the context of divorce or separation. Here is an explanation of each subsection:
(1) This subsection outlines the orders that a court, in accordance with section 90XS, can make concerning a superannuation interest (excluding an unflaggable interest):
Subsection (1)(a): The court can make an order directing the trustee (the entity responsible for managing the superannuation interest) not to make any splittable payment in relation to the superannuation interest without the court's permission or leave.
Subsection (1)(b): The court can make an order requiring the trustee to notify both:
- The member spouse (the spouse who holds the superannuation interest); and
- The non-member spouse (the spouse who does not hold the superannuation interest) within a specified period regarding the next occasion when a splittable payment becomes payable for the superannuation interest.
Section 90XT of Payment Splitting or Flagging by Court Order: Subsection 2
(2) When deciding whether to make an order in accordance with Section 2, the court has the authority to consider any matters it deems relevant. Specifically, the court may take into account the likelihood that a splittable payment will soon be payable in relation to the superannuation interest.
In summary, this section grants the court the power to issue orders related to superannuation interests. These orders can include:
- Directing the trustee not to make splittable payments without the court's permission; and
- Requiring the trustee to inform both the member spouse and the non-member spouse about future splittable payment occasions.
The court has discretion in considering relevant factors, including the likelihood of imminent splittable payments when making such orders.
Section 90XU: Flagging Order
Section 90XU of payment splitting or flagging by court order outlines the powers of a court regarding superannuation interests and the potential orders it can make in relation to such interests. Here's a breakdown of each subsection:
(1) Subsection 1 states that a court, in accordance with section 90XS, has the authority to issue orders related to a superannuation interest (excluding an unflaggable interest) as follows:
Subsection (1)(a): The court can make an order directing the trustee (the entity responsible for managing the superannuation interest) not to make any splittable payment. This is in respect of the interest without obtaining the court's permission or leave.
Subsection (1)(b): The court can make an order requiring the trustee to notify both the member spouse (the spouse who holds the superannuation interest) and the non-member spouse (the spouse who does not hold the superannuation interest) within a specified period regarding the next occasion when a splittable payment becomes payable in relation to the interest.
(2) This subsection explains that when deciding whether to issue an order in accordance with this section, the court has the discretion to consider any matters it deems relevant.X
Section 90XUA: Some Splittable Payments May Be Made Without Leave of Court
Here is an explanation of each subsection under Section 90XUA of payment splitting or flagging by court order:
(1) This subsection states that a flagging order is made under subsection 90XU(1) in relation to a person's superannuation interest (referred to as the "original interest"). This flagging order is also in an eligible superannuation plan (referred to as the "old ESP") and does not apply to a splittable payment.
Specifically, if the splittable payment is made by the trustee of the old ESP to the trustee of another ESP (referred to as the "new ESP") in respect of the original interest as part of a successor fund transfer, the flagging order does not apply to that payment.
(2) If the splittable payment mentioned in subsection (1) is indeed made, then the flagging order is considered to be made in relation to the new interest (the person's interest in the new ESP) from the moment the payment is made to the trustee of the new ESP.
(3) In this section, the term "successor fund transfer" refers to the transfer of a person's superannuation interest from the old ESP to the new ESP under specific circumstances:
Subsection (3)(a): The new ESP must confer on the person, in relation to the new interest, equivalent rights to the rights the person had in relation to the original interest.
Subsection (3)(b): Before the transfer takes place, the trustee of the new ESP must have agreed with the trustee of the old ESP to the conferral of such rights.
Importance of Seeking Legal Advice
Consulting with experienced lawyers, such as JB Solicitors, can provide you with the expertise and necessary guidance. This can help you navigate the complexities of family law and ensure that your rights and interests are protected. The interpretation and application of legal provisions can vary depending on individual circumstances and jurisdiction
Hence, we can provide personalised advice tailored to your specific situation. JB Solicitors' knowledgeable team can provide the necessary insights, explanations, and legal assistance. This allows our clients to make better decisions. They can achieve the best possible outcomes in matters concerning superannuation interests and family law.
Contact us today if you need more information about payment splitting or flagging by court order.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.