Senate

Revised Explanatory Memorandum

(Circulated by authority of the Attorney-General, the Honourable Christian Porter MP)

GENERAL OUTLINE

1. This Bill will give effect to a referral of power from Western Australia to the Commonwealth in respect of superannuation matters in family law proceedings for separating de facto couples in Western Australia.

2. The Bill will also extend federal bankruptcy jurisdiction to the Family Court of Western Australia to hear bankruptcy proceedings concurrently with family law proceedings, where appropriate.

Superannuation splitting

3. In 2001, the Family Law Act 1975 (Cth) ('the FLA') was amended by the Family Law Legislation Amendment (Superannuation) Act 2001 (Cth), to enable parties to family law proceedings to split their superannuation interests as part of their family law property division. Part VIIIB was inserted in the FLA, enabling superannuation interests to be split either by agreement or by order of the Court.

4. In 2008, the Family Law Amendment (De facto Financial Matters and Other Measures) Act 2008 (Cth) extended the financial settlement regime under the FLA to de facto couples, relying on referrals by States to the Commonwealth in accordance with subsection 51(xxxvii) of the Constitution. Between 2003 and 2010, all states except Western Australia provided the Commonwealth with full subject matter referrals of power for de facto property, maintenance and superannuation in family law matters. Since these referrals took effect, family courts have been able to make orders in respect of de facto couples' property as they do for married couples in all states and territories except Western Australia.

5. In 2006, Western Australia enacted the Commonwealth Powers (De facto Relationships) Act 2006 (WA) ('the WA Referral Act'), to provide a limited referral of power to the Commonwealth, to enable the splitting of Western Australian de facto couples' superannuation in family law matters. Western Australia has not provided a referral of power for other aspects of de facto property or financial matters. This narrow referral was not previously accepted by the Commonwealth, on the basis that it would not provide for a nationally consistent family law property regime for separating de facto couples.

6. In recent times, superannuation has become an increasingly valuable asset for Australians, and can be the largest single asset in the property pool of a separating family. The inability for de facto couples in Western Australia to split their superannuation has led to increasing inequity, particularly for couples with low-value property pools where superannuation may be the only asset. It also disproportionately affects women who, on average, accumulate less superannuation. To ensure de facto couples in Western Australia are treated consistently with de facto couples across the country in terms of superannuation, the Australian Government decided in October 2018 to accept and implement a narrow referral of power from Western Australia.

7. The amendments in Schedule 1 of this Bill will improve access to justice for separating de facto couples in Western Australia, enabling them to achieve a fair split of their superannuation assets in property settlements. All other aspects of property splitting for separated Western Australian de facto couples will continue to be dealt with under Western Australian law (that is, the federal FLA regime will not apply).

8. Schedule 1 of the Bill will create a new Part VIIIC in the FLA, dealing solely with superannuation splitting for separating de facto couples in Western Australia. The provisions will be contained in a discrete Part of the FLA in order to avoid any confusion about the application of geographical limiters elsewhere in the Act in respect of de facto couples' non-superannuation property interests. A separate Part will reduce the risk of unintended consequences to the operation of the existing property provisions in the FLA for de facto couples in other states. Finally, it will confine the Western Australian provisions in a single place, which should aid usability and comprehension for judicial officers, lawyers, and separating couples in Western Australia, seeking to find the WA-specific provisions.

9. The operative provisions in proposed Part VIIIC, set out in Schedule 1 of this Bill, would replicate provisions in existing Parts VIIIAB and VIIIB of the FLA. Certain procedural provisions, for example the geographical requirements and length of relationship requirements to commence Part VIIIC proceedings, replicate those contained in Part 5A of the Family Court Act 1997 (WA) ('the FCA'). This reflects that superannuation splitting proceedings will typically be heard concurrently with Part 5A property proceedings in either the Family Court of Western Australia or the Magistrates Court of Western Australia.

10. The superannuation splitting arrangements in new Part VIIIC will apply to all Western Australian de facto couples who have not yet received final property orders.

Bankruptcy jurisdiction

11. The objective of amending the Bankruptcy Act is to align proceedings for Western Australian de facto couples with proceedings across Australia for parties to a de facto relationship and parties to a marriage.

12. Currently, Western Australian de facto couples need to resolve matters where either or both parties are also involved in bankruptcy proceedings through separate proceedings in two different courts: family law proceedings in the Family Court of Western Australia, and bankruptcy proceedings in the Federal Court of Australia or the Federal Circuit Court of Australia.

History of the Family Court of Western Australia's jurisdiction in bankruptcy

13. In 2005, the Family Law Amendment Act 2005 amended the Bankruptcy Act to confer on the Family Court of Western Australia the same jurisdiction in bankruptcy (which related to parties to a marriage) that had been conferred on the Family Court of Australia by the Bankruptcy and Family Law Legislation Amendment Act 2005.

14. In 2008, the Bankruptcy Act was amended by the Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008, to allow de facto couples to access the federal family law courts for property and maintenance matters. As a consequence, the bankruptcy jurisdiction of the Family Court of Australia was extended to apply to concurrent bankruptcy and family law matters involving parties to a de facto relationship. That jurisdiction in relation to parties to a de facto relationship was not extended to the Family Court of Western Australia. The Family Court of Western Australia's jurisdiction therefore remained limited to concurrent bankruptcy and family law proceedings involving parties to a marriage.

Extending the Family Court of Western Australia's jurisdiction in bankruptcy

15. The Bill will extend the jurisdiction in bankruptcy of the Family Court of Western Australia to enable it to determine family law and bankruptcy matters together for parties to a de facto relationship. The jurisdiction of the Family Court of Western Australia will reflect the existing jurisdiction in bankruptcy of the Family Court of Australia, ensuring a nationally consistent approach to the exercise of bankruptcy jurisdiction in family law matters.

16. The amendments in Schedule 2 (principally in proposed section 35B) will confer jurisdiction in bankruptcy on the Family Court of Western Australia in two circumstances:

(i)

when a party to a marriage or de facto relationship is bankrupt and the trustee of the bankrupt's estate is a party or an applicant in relation to property settlement or spousal maintenance proceedings under the FLA or the Family Court Act 1997 (WA), or

(ii)

when proceedings which are before the Federal Court or the Federal Circuit Court are transferred to the Family Court of Western Australia.

17. Schedule 2 of the Bill largely mirrors existing provisions of the Bankruptcy Act that provide the Family Court of Australia with jurisdiction in bankruptcy when a party to a family law proceeding is a bankrupt.

18. The Bill also provides that appeals in relation to concurrent family law and bankruptcy proceedings for Western Australian de facto couples will mirror existing appeals pathways for married and de facto couples in other jurisdictions. To achieve that consistency, appeals will lie to the Full Court of the Federal Court where the bankruptcy matter originates in the Federal Court or Federal Circuit Court and is subsequently transferred to the Family Court of Western Australia. These proceedings generally involve complicated questions of bankruptcy law and are best considered by the specialist bankruptcy court, the Federal Court. Matters that originate in the Family Court of Western Australia will be appealed to the Supreme Court of Western Australia.

19. The ability to have bankruptcy and family law matters heard together will bring de facto couples in line with married couples in Western Australia, and with married and de facto couples in the other states and territories.

FINANCIAL IMPACT

20. The Bill will have nil financial implications. Although measures in the Bill will extend the jurisdiction of the Family Court of Western Australia and the Magistrates Court of Western Australia, they are unlikely to result in an increase in the number of cases heard in those courts. The measures will broaden the range of issues litigated within de facto proceedings, which are already heard by those courts.

REGULATION IMPACT

21. The measures in this Bill are machinery in nature and will have no more than minor regulatory impacts.

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Family Law Amendment (Western Australia De facto Superannuation Splitting and Bankruptcy) Bill 2019

1. This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Bill

2. This Bill will amend the Family Law Act 1975 (Cth) (FLA) to give effect to a referral of power from Western Australia to the Commonwealth in respect of superannuation matters in family law proceedings for separating de facto couples in Western Australia.

3. The Bill will also extend federal bankruptcy jurisdiction to the Family Court of Western Australia to hear bankruptcy proceedings concurrently with family law proceedings, where appropriate.

4. Consistent with Western Australia's referral, as set out in Commonwealth Powers (De facto Relationships) Act 2006 (WA), the amendments in this Bill will create a new Part VIIIC in the FLA, vesting power in the Family Court of Western Australia and the Magistrates Court of Western Australia to make superannuation splitting orders for de facto couples in that State. The Bill will also enable separating de facto couples to make agreements about how their superannuation should be split following separation.

5. This will ensure that separating de facto couples in Western Australia are able to achieve a fair split of their superannuation assets in property settlements, and will be treated consistently with de facto couples across Australia. The measures in this Bill will ensure greater access to justice for separating de facto couples in Western Australia. All other aspects of property splitting for separated Western Australian de facto couples will continue to be dealt with under Western Australian law (that is, the federal FLA regime will not apply).

6. The measures in the Bill will address the increasing inequity faced by de facto couples in Western Australian, as compared with de facto couples in other Australian states and territories, as a result of their inability to split their superannuation. This inequity is particularly felt by couples with low-value property pools, where superannuation may be the only significant asset to divide following separation. The inability for Western Australian de facto couples to split their superannuation also disproportionately affects women who, on average, accumulate less superannuation, which can be due to time taken out of the paid workforce to raise children, and due to the higher rates of women occupying part-time or lower paid roles.

7. The superannuation splitting arrangements in new Part VIIIC will apply to all Western Australian de facto couples who have not yet received final property orders.

8. The measures in the Bill will also confer jurisdiction in bankruptcy on the Family Court of Western Australia (FCWA) to enable the FCWA to hear family law and bankruptcy matters involving de facto couples concurrently. Under the Bankruptcy Act, the FCWA currently only has jurisdiction to hear family law and bankruptcy matters together for married couples. This results in Western Australian de facto couples pursuing proceedings in different courts: family law proceedings in the FCWA, and bankruptcy proceedings in the Federal Court of Australia or Federal Circuit Court.

9. The measures in the Bill will align proceedings for Western Australian de facto couples with proceedings across Australia for parties to a de facto relationship and parties to a marriage. This will ensure greater access to justice for separating de facto couples in Western Australia, who will no longer need to go to the effort and expense of being involved in proceedings in two different courts.

10. By enabling bankruptcy and family law proceedings to be brought together in the FCWA, the Bill will ensure property issues are dealt with simultaneously and will provide greater certainty to bankruptcy trustees, creditors and non-bankrupt partners.

Human rights implications

11. The Bill engages the following human rights:

•

The rights of equality and non-discrimination: Articles 2, 16 and 26 of the International Covenant on Civil and Political Rights (ICCPR)

•

The obligation to ensure the same rights for both spouses in respect of the ownership, acquisition, management, administration, enjoyment and disposition of property: Article 16 of the Convention on the Elimination of All Forms of Discrimination against Women (CEDAW)

•

The right to freedom from interference with the family and protection of the family: Articles 17 and 23 of the International Covenant on Civil and Political Rights (ICCPR) and article 10 (especially paragraph 1) of the International Covenant on Economic, Social and Cultural Rights (ICESCR)

Right to equality and non-discrimination

12. Article 26 of the ICCPR states that '[a]ll persons are equal before the law and are entitled without any discrimination to the equal protection of the law. In this respect, the law shall prohibit any discrimination and guarantee to all persons equal and effective protection against discrimination on any ground such as...national or social origin, property...or other status'.

13. The measures in this Bill seek to redress a gap in the law, which means that de facto couples in Western Australia are unable to split their superannuation interests following separation.

14. Currently, by virtue of their marital status and geographical location, de facto couples in Western Australia constitute the only class of couple relationship in Australia who are not able to split their superannuation interests following the end of their relationship. This differential treatment under the law is having increasingly unfair consequences for de facto couples in Western Australia, as the value of superannuation assets in the community continues to grow.

15. Schedule 1 of the Bill will address this inequity by extending to Western Australia de facto couples the ability to split their superannuation, either by agreement or by court order. The passage of the amendments in this Bill will mean all married and de facto couples in Australia are treated equally under the law in respect of their ability to divide their property, including their superannuation, following separation.

16. The Bill automatically applies the superannuation splitting arrangements in new Part VIIIC to all Western Australian de facto couples who have not yet received final property orders.

17. The Bill will also enable Western Australian de facto couples to participate in private arbitration in relation to their superannuation proceedings, in the same circumstances as married and de facto couples in the other states and territories.

18. The measures in this Bill that amend the Bankruptcy Act will align proceedings for Western Australian de facto couples with proceedings across Australia for parties to a de facto relationship and parties to a marriage.

19. Currently, under the Bankruptcy Act, the FCWA only has jurisdiction to hear bankruptcy and family law matters together for married couples. In contrast, the Family Court of Australia is able to exercise jurisdiction in bankruptcy in all other Australian jurisdictions with respect to both married and de facto couples.

20. The ability to have bankruptcy and family law matters heard together will bring de facto couples in line with married couples in Western Australia, and with married and de facto couples in the other states and territories.

21. The Bill therefore promotes equal protection before the law for separating de facto couples in Western Australia.

The obligation to ensure the same rights for both spouses in respect of the ownership, acquisition, management, administration, enjoyment and disposition of property

22. Article 16 of CEDAW states that 'States Parties shall take all appropriate measures to eliminate discrimination against women in all matters relating to marriage and family relations and in particular shall ensure, on a basis of equality of men and women...(h) the same rights for both spouses in respect of the ownership, acquisition, management, administration, enjoyment and disposition of property, whether free of charge or for a valuable consideration.'

23. While the current inability of Western Australia de facto couples to split their superannuation applies equally to men and women, the consequences of this inability for couples to transfer ownership of their superannuation following a relationship breakdown may disproportionately affect women. This is due to the lower amounts of superannuation women accumulate by retirement, on average.

24. Women's obstacles to accumulating as much superannuation as their male partner may arise from, for example, taking time out of the paid workforce to give birth to, and care for children. Differential levels of superannuation between men and women are also explained by higher incidence of women occupying casual, part-time or lower paid roles over their career. According to the Australian Bureau of Statistics, in 2017-18, the median superannuation balance for women aged 55-64 was $119,000 compared to $183,000 for men of the same age. The measures in Schedule 1 of the Bill will ensure that, if a couple agrees, or if a court determines that it is fair and equitable, the superannuation interests of both parties may be redistributed between them, having regard to the parties' respective contributions (including non-financial and homemaker contributions), and their future needs (including consideration of their future earning capacity).

25. The Bill therefore promotes the equality of the spouses with respect to ownership of property following the end of the relationship.

Right to respect for the family

26. Article 17(1) of the ICCPR states that 'no one shall be subjected to arbitrary or unlawful interference with his privacy, family, home or correspondence, nor to unlawful attacks on his honour and reputation'. Article 23(1) states that 'the family is the natural and fundamental group unit of society and is entitled to protection by society and the State'. Article 10(1) of the ICESCR provides that the 'widest possible protection and assistance should be accorded to the family, which is the natural and fundamental group unit of society, particularly for its establishment and while it is responsible for the care and education of dependent children.'

27. The Bill promotes the protection from interference with the family by ensuring a proper and effective system for superannuation splitting agreements to empower families to take responsibility for their own affairs without interference of a court. The jurisdiction of the family law courts to make an order for superannuation splitting following a breakdown of a de facto relationship in Western Australia otherwise conferred by this Bill, will be ousted by the binding superannuation agreement provisions.

28. However, the autonomy afforded to parties would be subject to appropriate safeguards, consistent with the existing protections in Division 3 of the Family Court Act 1997 (WA). An agreement would only be binding if each party has received independent legal advice prior to entering into the arrangement. The court would have the power to set aside a financial agreement in certain circumstances, for example if there has been a material change of circumstances or circumstances that mean it would not be just and equitable to enforce the agreement. This provides the appropriate balance between respect for privacy and for the family unit, and the provision of appropriate safeguards and protections for vulnerable parties.

29. The amendments would make clear that, where parties have been provided with legal advice as to the relevant matters, and entered into the agreement in good faith, the agreement will generally be binding and enforceable. This is intended to provide finality to parties in respect of the resolution of their superannuation matters and to support families to make decisions about what is best for their family without undue interference from the judiciary.

30. The Bill therefore promotes the right to freedom from interference with the family and protection of the family.

Conclusion

31. The Bill is compatible with human rights because it promotes the protection of some human rights, and does not limit any human rights.

Notes on Clauses

Preliminary

Clause 1 - Short title

1. This clause provides for the short title of the Act to be the Family Law Amendment (Western Australia De facto Superannuation Splitting and Bankruptcy) Act 2019.

Clause 2 - Commencement

2. This clause provides for the commencement of the provisions in the Bill, as set out in the table.

3. Item 1 in the table provides that the whole of the Act will commence on a single day to be fixed by Proclamation. The item provides that a Proclamation to commence the Act must not specify a day that occurs before the day section 4 of the Commonwealth Powers (De facto Relationships) Act 2006 (WA) (the WA Referral Act) commences.

4. This approach will ensure that the operative provisions of the WA Referral Act commence before the Act commences. It will also allow for commencement of the Act to be timed to coincide with commencement of any amendments to Western Australian law required to support implementation of the referral.

5. The referral is limited to de facto superannuation splitting. Other aspects of a de facto couple's family law property proceedings will continue to be heard under the Family Court Act 1997 (WA). The Bill reflects this split jurisdiction in Western Australian property proceedings. Amendments to Western Australian law will ensure that that the Western Australian courts, when considering a separating de facto couple's property pool, can make a global assessment of what would constitute a just and equitable division of the couple's property. The Bill has been drafted to ensure that de facto parties can run their superannuation splitting proceedings at the same time as their other family law proceedings, before the same judge. This streamlined approach will ensure superannuation is considered in the context of other property in the property pool of separating Western Australian de facto couples and that matters can be fully resolved as quickly and cost-effectively as possible.

6. However, the narrow nature of Western Australia's referral of power gives rise to complex interactions between the superannuation splitting provisions in the federal Family Law Act and the property division provisions in the Family Court Act 1997 (WA). Providing for commencement of this Bill by Proclamation will allow the Western Australian Government to enact amendments to the Family Court Act to support the operation of Part VIIIC of the Family Law Act and amendments to the Bankruptcy Act provided for in this Bill.

Clause 3 - Schedules

7. Clause 3 of the Bill provides that legislation that is specified in the schedules is amended or repealed as set out in the applicable items in the Schedule. Clause 3 also provides that any other item in the schedules has effect according to its terms.

Schedule 1 - Amendment of the Family Law Act 1975

Item 1 - After Division 2 of Part V

8. This item will insert Division 2A after existing Division 2 of Part V of Family Law Act 1975 (FLA). Part V of the FLA provides for the jurisdiction of the courts in respect of matrimonial causes (Division 1) and de facto financial causes (Division 2).

9. This item will insert Division 2A to provide for the jurisdiction of the courts in matters arising under new Part VIIIC-that is, superannuation interests relating to de facto relationships in Western Australia. This will be through new sections 39H and 39J.

10. Section 39H will enable proceedings to be instituted in relation to matters arising under new Part VIIIC in either the Family Court of Western Australia or the Magistrates Court of Western Australia sitting at a place outside a metropolitan region (within the meaning of the Family Court Act 1997 (WA)).

11. Subsection 39H(2) will provide that subsection (1) has effect subject to this Part (Part V of the FLA).

12. Subsection 39H(3) will prevent a proceeding in relation to a matter arising under Part VIIIC that is able to be instituted under the Act from being instituted otherwise than under the Act.

13. Section 39J will provide that federal jurisdiction is conferred on:

•

the Family Court of Western Australia

•

the Magistrates Court of Western Australia constituted by a magistrate who is not a Family Law Magistrate of Western Australia, sitting at a place outside a metropolitan region (within the meaning of the Family Court Act (WA), and

•

the Magistrates Court of Western Australia constituted by a Family Law Magistrate of Western Australia, sitting at any place in Western Australia.

14. The intention is that 'specialist' Family Law Magistrates who are co-located with the Family Court of Western Australia exercise this jurisdiction. However, for regional areas, where there may not be a specialist Family Law Magistrate, a magistrate who is not a 'specialist' Family Law Magistrate, can exercise this jurisdiction as needed.

15. Subsection 39J will clarify that this section has effect subject to this Part (Part V of the FLA).

Item 1A - Subparagraph 10L(2)(b)(i)

16. This item will amend subparagraph 10L(2)(b)(i) of the FLA to include proceedings under Part VIIIC of the Act, alongside Part VIII, VIIIA, VIIIAB, VIIIB and section 106A proceedings.

17. The amendment will allow superannuation splitting proceedings for Western Australian de facto couples to be privately arbitrated if both parties agree, consistent with the arrangements currently in place for married couples and de facto couple from other states and territories.

Item 2 - At the end of section 44

18. This item will insert three new subsections to section 44 of Part V of the FLA. Existing section 44 provides that proceedings under the FLA are instituted by application, unless otherwise prescribed by the regulations (the Family Law Regulations 1984) or by the applicable Rules of Court.

19. Subsection (7) will be inserted to section 44 to specify when a proceeding can be instituted under new Part VIIIC. A party to a de facto relationship may apply for an order under Part VIIIC only if the application is made within the 'standard application period' or if both parties to the de facto relationship consent to the application. The 'standard application period' is two years after the end of the de facto relationship (paragraph (i)), or 12 months after a Western Australian financial agreement between the parties was set aside or found to be invalid. Subsection (9) would allow the court discretion to grant leave for a party to apply after the end of the 'standard application period' in subsection (7), if satisfied that hardship would be caused to the party or to a child if leave were not granted.

20. Subsection (8) will provide the court with the discretion to dismiss proceedings instituted by an application made with the consent of both parties, if it is satisfied that the consent was not genuine consent-that is, it was obtained by fraud, duress or unconscionable conduct-and the continuation of the proceedings would amount to a miscarriage of justice.

Item 3 - At the end of subsection 90RA(3)

21. This item will insert a Note to existing subsection 90RA(3) of Part VIIIAB of the FLA. Part VIIIAB deals with financial matters relating to de facto relationships. Section 90RA defines 'participating jurisdictions' and 'referring states' to establish the territorial limits of the Commonwealth's power to legislate for de facto financial matters, which rely on powers that are referred by State Parliaments. The FLA does not apply in States that have not referred powers over those matters.

22. The Note will clarify that Western Australia is not a 'referring state' for the purposes of Part VIIIAB. The purpose of this Note is to avoid any confusion about the effect of the narrow referral of power accepted by the Commonwealth in relation to de facto superannuation matters. The fact that Western Australia is not a referring state means that the Commonwealth does not have the power to deal with financial matters relating to Western Australian de facto relationships for the purposes of Part VIIIAB of the FLA.

23. The Note clarifies that new Part VIIIC to be inserted in the FLA by this Bill relies on the referral of power to the Commonwealth by the Parliament of Western Australia for superannuation matters relating to de facto partners made by paragraphs 4(1)(a) and (b) of the Commonwealth Powers (De facto Relationships) Act 2006 (WA).

Item 4 - After Part VIIIB

24. This item will insert new Part VIIIC into the FLA, to enable the Family Court of Western Australia and the Magistrates Court of Western Australia to make orders splitting the superannuation interests of separating de facto couples who have a geographical connection to Western Australia.

25. This Part will also enable separating de facto couples in Western Australia to split their superannuation by agreement, as part of a financial agreement made under the Family Court Act 1997 (WA) (FCA).

26. The provisions to be included in Part VIIIC are described in more detail below.

Division 1 - Preliminary

Subdivision A - Scope of this Part

90YA - Object of this Part

27. New section 90YA explains the object of new Part VIIIC of the FLA. It provides that Part VIIIC will enable the splitting of superannuation interests between separating de facto partners in Western Australia, either by agreement or by a court order.

90YB-Application of this Part

28. Section 90YB will provide for the application of new Part VIIIC of the FLA, and the Commonwealth's powers in relation to superannuation matters for de facto partners arising out of the breakdown of de facto relationships. Subsection (1) establishes that the exercise of Commonwealth power under new Part VIIIC relies on the referral of power in relation to superannuation interests of de facto partners arising out of the breakdown of de facto relationships, made by the Parliament of Western Australia. That referral must be made for the purposes of paragraph 51(XXXVII) of the Constitution, and to the extent that superannuation matters are not otherwise captured through a legislative power of the Commonwealth.

29. Subsection (2) will clarify the meaning of superannuation matters for the purposes of this referral of power to the Commonwealth. Superannuation matters means the distribution of superannuation benefits or prospective superannuation entitlements of or relating to de facto partners.

30. Subsection (3) will prevent, and avoid any ambiguity about, a law of Western Australia from terminating the reference to the Commonwealth Parliament in particular circumstances. This will ensure the Commonwealth's power to legislate with respect to these matters, provided the reference of the Western Australian Parliament is in operation.

31. Subsection (4) provides that Part VIIIC of the FLA will cease if Western Australia's reference terminates.

90YC - This Part overrides other laws, trust deeds etc.

32. Section 90YC will provide that new Part VIIIC will override other laws, trust deeds etc that prevent, either expressly or by implication, the division of superannuation. This section will ensure the effectiveness of Part VIIIC in enabling the division of superannuation interests on the breakdown of a de facto relationship, despite other laws or instruments.

33. Subsection 90YC(1) will provide that new Part VIIIC has effect despite anything to the contrary in any other law of the Commonwealth (paragraph (a)), any law of a State or Territory (paragraph (b)) or anything in a trust deed or other instrument (paragraph (c)), whether made before or after the commencement of Part VIIIC.

34. Subsection 90YC(2) will provide that, without limiting subsection 90YC(1), nothing done in compliance with new Part VIIIC by the trustee of an eligible superannuation plan is to be treated as resulting in a contravention of a law or instrument referred to in subsection 90YC(1).

35. The intention of subsection 90YC(2) is to provide protection for a trustee who acts in accordance with the provisions of new Part VIIIC. If an action taken by the trustee in accordance with the requirements of new Part VIIIC means that the trustee will otherwise be in breach of the governing rules of the superannuation fund, such a breach will not be treated as resulting in a contravention.

36. Subsection 90YC(3) will provide that Part VIIIC has effect subject to the Superannuation (Unclaimed Money and Lost members) Act 1999. This will ensure that the division of superannuation interests between separating de facto partners as provided by this Bill includes superannuation interests that have been lost or unclaimed by a party.

Subdivision B - Interpretation

90YD - Definitions

37. Section 90YD will provide for definitions applying to new Part VIIIC. These definitions will assist the user to understand the meaning of certain terms used throughout Part VIIIC. The definitions largely replicate definitions provided in Part VIIIB of the FLA. Specifically, the following terms will be defined:

•

approved deposit fund - this term has the meaning provided for in the SIS Act (defined below).

•

declaration time - this term is defined to mean the time when the separation declaration was signed by a party to the de facto relationship (or last signed by a party, if both parties have signed the separation declaration). There is a note to clarify that if a party has died, the party's legal representative may sign the declaration (see subsection 90YU(2)).

•

eligible superannuation plan - this term will mean any of a number of listed types of funds:

(a)

a superannuation fund within the meaning of the SIS Act (defined below). This covers schemes regulated by the SIS Act. It also covers schemes known as 'constitutionally protected' schemes (because of their tax exempt status), which are primarily state public sector schemes, judges' pension schemes and parliamentary superannuation schemes. It also covers non-SIS regulated superannuation schemes; and

(b)

an approved deposit fund within the meaning of the SIS Act; and

(c)

a retirement savings account (defined later in this provision as an 'RSA'); and

(d)

an account within the meaning of the Small Superannuation Accounts Act 1995; and

(e)

a superannuation annuity (within the meaning of the Income Tax Assessment Act 1997).

The intention is to ensure that the broad range of superannuation funds covered by Part VIIIB of the FLA are also covered by the new Part VIIIC.

•

flagging order - this term has the meaning given by section 90YZ(1).

•

flag lifting agreement - this term has the meaning given by section 90YS. It is an agreement that the parties to a de facto relationship may make at any time when a payment flag is operating on a superannuation interest.

•

in force - this term has the meaning given by section 90YI.

•

interest - this term is defined as including a prospective or contingent interest, and also includes an expectancy.

•

member - this term, in relation to an eligible superannuation plan, is defined as including a beneficiary (including a contingent or prospective beneficiary).

•

member spouse - this term, in relation to a superannuation interest, is defined as the party to the de facto relationship who has the superannuation interest.

•

non-member spouse - this term, in relation to a superannuation interest, is defined as the party to the de facto relationship who is not the member spouse in relation to the superannuation interest.

•

operative time - this term refers to the time trustees need to take action on a superannuation agreement or court order:

(a)

is has the meaning given by section 90YM in relation to a payment split under a superannuation agreement or flag lifting agreement; or

(b)

it has the meaning given by section 90YO or paragraph 90YQ(2)(c) as appropriate in relation to a payment flag under a superannuation agreement; or

(c)

it means the time specified in the order in relation to a payment split under a court order.

•

payment flag - this term has the following meaning:

(a)

the application of section 90YP in relation to a superannuation interest; or

(b)

the application of a flagging order in relation to a superannuation interest.

The practical effect of a payment flag is to 'injunct' the trustee so that no payments in relation to the superannuation interest are made.

•

payment split - this term has the following meaning:

(a)

the application of section 90YN in relation to a splittable payment; or

(b)

the application of a splitting order in relation to a splittable payment.

This term refers to the division of superannuation payments between parties to the relationship, whether by agreement or by court order, when a payment becomes payable by the superannuation trustee.

•

percentage-only interest - this term is defined as the superannuation interest prescribed by the regulations. The Family Law (Superannuation) Regulations 2001 provide the meaning of percentage-only interest in regulation 9A.

•

regulated superannuation fund - this term has the meaning provided for in the SIS Act (defined below).

•

reversionary beneficiary - this term is defined as a person who becomes entitled to a benefit in respect of a superannuation interest of a party to a de facto relationship, after the party dies.

•

reversionary interest - this term has the meaning given by section 90YH. It is any interest where the entitlement to benefits in respect of an interest in an eligible superannuation plan is conditional on the death of another person who is still living.

•

RSA - this term is defined as a retirement savings account within the meaning of the Retirement Savings Account Act 1997.

•

secondary government trustee - this term is defined to mean a trustee that is the Commonwealth, a State or Territory, and is a trustee only because of the operation of section 90YF. Section 90YF extends the meaning of 'trustee' to include a person who has the power to make payments to members of the eligible superannuation plan, but is not the trustee of that plan.

•

separation declaration - this term has the meaning given by section 90YU. It is a written declaration for the purpose of section 90YU and may be included in the superannuation agreement. It is a declaration by one or both parties that the de facto relationship has broken down.

•

SIS Act - this is defined as the Superannuation Industry (Supervision) Act 1993.

•

splittable payment - this term has the meaning given by section 90YG. It is a payment in respect of a superannuation interest of a member that is capable of being split by court order or by agreement.

•

splitting order - this term has the meaning given by subsection 90YY(1).

•

superannuation agreement - this term has the meaning given by section 90YK. Subsection 90YK(2) defines superannuation agreement for the purposes of new Part VIIIC, as forming part of a Western Australian financial agreement. The superannuation agreement deals with the superannuation interests of the parties.

•

superannuation interest - this term is defined to mean an interest that a person has as a member of an eligible superannuation plan, but does not include a reversionary interest.

•

trustee - this term is defined to be a trustee, in the normal use of that term, or a person prescribed by the Family Law (Superannuation) Regulations 2001 to be a trustee, or a person who manages an eligible superannuation plan.

An extended meaning of 'trustee' is provided in section 90YF to capture the circumstance where a person who is not the trustee of a plan nevertheless has the power to make payments to members of the plan, and is therefore considered to be a trustee for the purposes of Part VIIIC.

•

unflaggable interest - this term is defined to mean a superannuation interest prescribed in the regulations. Regulation 10A of the Family Law (Superannuation) Regulations 2001 provides that an unflaggable interest is a superannuation interest of a member spouse that is in the payment phase.

•

unsplittable interest - this term is defined to mean a superannuation interest prescribed by the regulations. Regulation 11 of the Family Law (Superannuation) Regulations 2001 provides that certain low-value superannuation interests are unsplittable.

•

Western Australian financial agreement - this term is defined to mean an agreement that is a financial agreement within the meaning of Part 5A of the Family Court Act 1997 (WA) (FCA). Part 5A of that Act provides for the division of property following the break down of a de facto relationship.

•

Western Australian Rules of Court - this term is defined to mean the rules made under section 244 of the Family Court Act 1997 (WA) as in force from time to time. This is because superannuation splitting proceedings under Part VIIIC will often be run concurrently with non-superannuation property proceedings under Part 5A of the Family Court Act 1997 (WA). It will assist the court and parties to have a single set of rules apply to the proceedings, rather than to have the Family Law Rules 2004 (Cth) apply to the superannuation aspect of the proceedings and the Family Court Rules 1998 (WA) apply to the non-superannuation aspect of the proceedings.

90YE - Meaning of child of a de facto relationship

38. Section 90YE replicates the definition of 'child of a de facto relationship' provided in section 90RB of the Family Law Act. The definition in section 90YE is provided for the purposes of Part VIIIC. However, as indicated in the Note to the provision, users should refer to Subdivision D of Division 1 of Part VII of the Family Law Act to determine who is a child of a person.

39. The term 'child of a de facto relationship' is used in a number of provisions in Part VIIIC - for example in section 90YS (where the court may consider a change in circumstances relating to the care, welfare and development of a child of the de facto relationship when determining whether to set aside a flag lifting agreement or termination agreement), in section 90YZC (in determining the length of the de facto relationship), and in section 90YZD (when considering the financial and non-financial contributions parties have made that are taken into account when determining whether it would be just and equitable to make an order altering the property interests of the parties).

90YF - Extended meaning of trustee

40. Section 90YF of the Bill will provide a definition of 'trustee' for the purposes of new Part VIIIC of the FLA. This section replicates the effect of existing section 90XDA of Part VIIIB of the FLA, so as to apply to parties of a de facto relationship in Western Australia.

41. A trustee is defined to be a trustee, in the normal use of that term, or a person prescribed to be a trustee or a person who manages the eligible superannuation plan.

42. For most eligible superannuation plans, the trustee will both administer the plan and be responsible for making payments to a member in respect of an interest in that eligible superannuation plan.

43. However, in some eligible superannuation plans, the person who is the 'trustee', in the sense of being the person who manages the plan, will not be the same person who has the power to make payments to members of the plan.

44. It is therefore necessary to provide that in such situations, the person who has a power to make payments to members of the plan should be taken to be the trustee of the plan for the purposes of Part VIIIC of the FLA. If a person who is not the trustee of an eligible superannuation plan nevertheless has the power to make payments to members of the plan, then references in Part VIIIC to the trustee of the plan include references to that person.

90YG - Splittable payments

45. Section 90YG of new Part VIIIC defines 'splittable payments'. This section replicates the effect of existing section 90XE of Part VIIIB of the FLA, so as to apply to parties to a de facto relationship in Western Australia.

46. Section 90YG provides a list of payment types, in respect of a superannuation interest of a party to a de facto relationship, to be splittable payments:

(a)

a payment to the party (paragraph 90YG(1)(a));

(b)

a payment to another person for the benefit of the party (paragraph 90YG(1)(b)). This will cover the situation where the member party 'rolls over' his or her superannuation interest into a new eligible superannuation plan. This is particularly important given the ability to move superannuation interests between eligible superannuation plans;

(c)

a payment to the legal personal representative of the party, after the death of the party (paragraph 90YG(1)(c));

(d)

a payment to a reversionary beneficiary, after the death of the party (paragraph 90YG(1)(d)); and

(e)

a payment to the legal personal representative of a reversionary beneficiary, after the death of the reversionary beneficiary (paragraph 90YG(1)(e)).

47. Subsection 90YG(2) of new Part VIIIC will provide that a payment is not a splittable payment if it is so prescribed by the regulations. Some payments should not be splittable, for example, because the superannuation interest is too small for a payment to be appropriate, or because the splittable payment is being made as a result of a special circumstance of the member spouse, such as temporary disability or illness.

48. The circumstances in which a payment is unsplittable are provided in regulation 11 of the Family Law (Superannuation) Regulations 2001.

49. Paragraph 90YG(1)(b) will provide that a payment to another person for the benefit of the party to a de facto relationship is a splittable payment. This means, for example, that when a superannuation interest is 'rolled over' to another fund, this will be a splittable payment and will therefore be subject to any payment splitting agreement or order that is in effect on the interest.

50. The policy intention is that all roll overs to another fund, in whatever circumstances, will be splittable payments. There may be uncertainty as to whether bulk transfers of members, that is where a payment is made to another person for the benefit of more than one person, would be covered by paragraph 90YG(1)(b). This may occur in situations where smaller plans are transferred into a master trust.

51. Subsection 90YG(3) of new Part VIIIC will clarify this and provide that if a payment is made to another person for the benefit of 2 or more persons who include the party to the de facto relationship, then the payment, to the extent that it is paid for the benefit of the party, is a splittable payment.

90YH - Reversionary interest

52. Section 90YH of new Part VIIIC defines 'reversionary interest'. This section replicates the effect of existing section 90XF of Part VIIIB of the FLA, so as to apply to parties to a de facto relationship in Western Australia.

53. A reversionary interest is an interest that 'reverts' to a nominated beneficiary. Section 90YH will provide that a reversionary interest for the purposes of new Part VIIIC of the FLA is any interest where the entitlement to benefits in respect of an interest is conditional on the death of another person who is still living.

90YI - Meaning of in force

54. It is intended that a superannuation agreement will form part of a financial agreement dealing with the other property of the parties under Part 5A of the Family Court Act 1997 (WA) (FCA). As such, a superannuation agreement will be in force in the same circumstances under which a Western Australian financial agreement would be in force.

55. Subsection 90YI(1) will provide that subject to subsection 90YS(7), a superannuation agreement is in force at any time when the relevant Western Australian financial agreement is binding on the parties to the Western Australian financial agreement in accordance with the FCA.

56. Subsection 90YS(2) will provide for the circumstances when a flag lifting agreement is in force. This will be when it meets the requirements in subsection 90YS(3) (it is signed by both parties, both parties have obtained independent legal advice, a certificate confirming that legal advice is attached to the agreement, and both parties have been provided with a copy of the agreement), and it has not be set aside by a court or terminated by the parties.

Subdivision C - Rules of Court

90YJ - Rules of Court

57. The Family Court of Western Australia relies on the Standard Rules of Court under the Family Law Act 1975 (Cth) (FLA) when it is exercising its federal family law jurisdiction (for example, in matters involving married couples). When the Family Court of Western Australia is exercising State family law jurisdiction under the Family Court Act 1997 (WA) (FCA), it applies the Family Court Rules 1998 (WA), made under section 244 of the FCA.

58. Given that federal superannuation splitting proceedings under Part VIIIC are likely to be run concurrently with non-federal property proceedings under Part 5A of the FCA, the intention is for the court to be able to apply a single set of rules, to avoid any confusion or inconvenience for the court, lawyers and the parties. As such, several provisions in Part VIIIC will refer to the Western Australian Rules of Court, and provide for those rules to make provision for certain matters in Part VIIIC - for example, sections 90YZF, 90YZG, 90YZH and 90YZI.

59. However, State rules of court cannot apply of their own force when a State court is exercising federal family law jurisdiction.

60. For this reason, subsection 90YJ(1) would be included in the Bill to authorise the court's rule-making authority in Western Australia to make rules of court which apply for the purposes of Part VIIIC. This provision will provide that the Western Australian authority responsible for making court rules under section 244 of the FCA may make rules for the purposes of Part VIIIC. Any court rules made by the Western Australian authority for the purposes of Part VIIIC must not be inconsistent with the Part VIIIC or regulations made under the Part. This provision is only intended to prescribe the rules of court that are to apply in the exercise of jurisdiction under Part VIIIC of the FLA, and not otherwise.

61. As provided by subsection 90YJ(2), this provision will not affect any power to make rules under any other law. It is a matter for Western Australia to determine the appropriate rules of court for its non-federal jurisdiction, and this provision would not seek to confine that power in any way

Division 2 - Payment splitting or flagging by agreement

Subdivision A - Superannuation agreements

90YK-Superannuation agreement to be included in Western Australian financial agreement if about a de facto relationship

62. Section 90YK will replicate the effect of existing section 90XHA of Part VIIIB of the FLA, so as to apply to parties to a de facto relationship in Western Australia.

63. Like the position in relation to superannuation agreements between parties to a marriage or a de facto relationship in other jurisdictions, a superannuation agreement between parties to a de facto relationship in Western Australian will form part of a more general financial agreement dealing with the distribution of property on the breakdown of the relationship. However, in the case of Western Australian de facto couples, the financial agreement is made under the Family Court Act 1997 (WA) (FCA) rather than under Part VIIIAB of the FLA.

64. Section 90YK will provide that:

•

the section applies if a Western Australian financial agreement includes an agreement that deals with superannuation interests of either or both of the parties to the agreement;

•

the part of the Western Australian financial agreement that deals with superannuation interests is a superannuation agreement for the purposes of Part VIIIC of the FLA;

•

a superannuation agreement will have effect only in accordance with Part VIIIC of the FLA, and will not be able to be enforced under the FCA;

•

a superannuation agreement that is included in a Western Australian financial agreement made under the FCA in contemplation of a de facto relationship will have no effect until the parties enter into that relationship; and

•

a superannuation interest of a party to a Western Australian financial agreement is treated as having been acquired at the time when that party first becomes a member of the eligible superannuation plan in respect of that interest.

65. Given that a superannuation agreement will form part of a broader FCA financial agreement, parties making agreements should clearly identify in the agreement which clauses are made under Part VIIIC of the FLA and which clauses are made under the FCA. The rules about when an agreement is binding under section 205ZS of the FCA, are intended to apply to the whole of the agreement, including the superannuation agreement.

90YL - Part VIIIB superannuation agreements that become superannuation agreements for the purposes of this Part

66. Section 90YL makes provision for the recognition of financial agreements made under Part VIIIAB of the Family Law Act (including financial agreements incorporating superannuation agreements made under Part VIIIB of the FLA), if the parties to those agreements subsequently meet the section 90YZB geographical requirement during the life of the agreement and after commencement of Part VIIIC. That is, if the parties make a financial agreement in a State or Territory other than Western Australia, and one or both parties subsequently become resident in Western Australia, and if the Western Australian law provides for the agreement to be a Western Australian financial agreement, the Part VIIIAB agreement will be taken to be a Western Australian financial agreement subject to the requirements in section 90YL.

67. Part VIIIC applies to the Part VIIIB agreement that forms part of the Part VIIIAB agreement, if it subsequently becomes a Western Australian financial agreement, with such modifications to Part VIIIC as are necessary for the agreement to operate.

68. Reciprocal recognition for Western Australian financial agreements, in circumstances where the parties become resident in another state or territory, is already provided for under section 90UE of the Family Law Act 1975.

Subdivision B - Payment splitting

90YM - Operative time for payment split

69. Section 90YM replicates the effect of section 90XI of Part VIIIB of the FLA, so as to apply to parties to a de facto relationship in Western Australia.

70. An agreement to split a splittable payment, pursuant either to a superannuation agreement or a flag lifting agreement, will have effect by force of the legislation. Therefore, it is necessary to provide for the time at which the payment split becomes operative, in order that the trustee knows when the legal obligations to implement the payment split will apply. It will clearly be necessary that the trustee be notified of the agreement.

71. A payment split will only become operative after the de facto relationship has broken down. Therefore it is necessary that the parties demonstrate this breakdown.

72. Section 90YM of new Part VIIIC will provide that the 'operative time' for a payment split will be the beginning of the fourth (4th) working day after the day on which a copy of the agreement is served on the trustee. This is to ensure that there is sufficient time for the trustee to receive the agreement and make the necessary administrative arrangements, such as forwarding it to the area of the organisation responsible for implementing the payment split or to the fund administrator, in accordance with the agreement.

73. A payment split, pursuant to an agreement, will only operate in the context of the breakdown of a de facto relationship. In circumstances where the relationship has not broken down, then an agreed payment split is not to operate. It is necessary for the parties to provide the trustee with a declaration that the relationship has broken down.

74. To achieve this, paragraph 90YM(1)(a) of new Part VIIIC will provide that the agreement to be served on the trustee is to be accompanied by a 'separation declaration', for which the declaration time is not more than 28 days before the service on the trustee (subsection 90YM(2)).

75. If the agreement specifies a method for calculating a base amount, paragraph 90YM(1)(b) requires that the copy of the agreement be accompanied by a document setting out the amount calculated using that method.

76. It may be necessary, in order to ensure that the superannuation agreement becomes operative in appropriate circumstances, and does not become operative in inappropriate circumstances, that a further declaration by one or both of the parties is required. For this reason, paragraph 90YM(1)(c), will provide that, in addition to the requirements of paragraphs 90YM(1)(a) and (b), the regulations may provide for a further declaration. If such a further declaration is required, then the operative time will not be reached until such further declaration has also been made.

90YN - Payment split under superannuation agreement or flag lifting agreement

77. A superannuation agreement, or a flag lifting agreement, may provide for a payment split. A flag lifting agreement is defined in section 90YS of new Part VIIIC of the FLA as an agreement the parties to a de facto relationship may make at any time when a payment flag is operating on a superannuation interest.

78. Section 90YN of new Part VIIIC will provide for the operation of this payment split. This section replicates the effect of existing section 90XJ of Part VIIIB of the FLA, so as to apply to parties to a de facto relationship in Western Australia.

79. Paragraph 90YN(1)(a) of new Part VIIIC will provide that section 90YN will apply to a superannuation interest if the interest is identified in a superannuation agreement or a flag lifting agreement. This means that the agreement will have to specify any superannuation interest that is to be covered by the agreement. If parties make a superannuation agreement or a flag lifting agreement before any superannuation interest is actually held, it will be possible to provide for the interests either by specific or by generic description. That is, parties will be able to make an agreement about 'superannuation in XYZ fund' or, alternatively, parties will be able to make an agreement about 'any superannuation interest' that either party holds.

80. Subsection 90YN(1)(b) of new Part VIIIC will provide that section 90YN will apply to the superannuation interest, where the interest is a percentage-only interest, if the superannuation agreement or flag lifting agreement specifies a percentage that is to apply for the purposes of this sub-paragraph, and/or it specifies a percentage that is to apply to all splittable payments in respect of this interest.

81. Subsection 90YN(1)(c) of new Part VIIIC will provide that section 90YN will apply to the superannuation interest, where the interest is not a percentage-only interest, if the superannuation agreement or flag lifting agreement contains one of three splitting methods:

•

The agreement may specify the base amount of the superannuation which the non-member will receive (paragraph 90YN(1)(c)(i)). This will enable parties to identify an amount (rather than a percentage) to transfer. This method may be used where a lump sum is to be split and that sum is known. This method may also be used where the value of a superannuation interest is being considered together with other property and part of the superannuation interest is to be transferred to achieve a just and equitable result. For example, if the property of the parties consists of a house valued at $200,000 and a superannuation interest valued at $300,000, the parties may wish to agree that one party takes the house and a transfer of $50,000 of the superannuation interest and the other party takes the remaining $250,000 of the superannuation interest.

•

The agreement may specify a method by which such a base amount can be calculated at the time when the agreement is served on the trustee under section 90YM (paragraph 90YN(1)(c)(ii)).

•

Finally, the agreement may specify a percentage which the non-member will receive of all splittable payments (paragraph 90YN(1)(c)(iii)).

82. The three methods will provide a comprehensive array of ways in which parties will be able to split a superannuation interest. It is necessary to provide this level of detail so that the trustee is able to split the superannuation interest with certainty.

83. Paragraph 90YN(1)(d) will provide that section 90YN applies to a superannuation interest if the agreement is in force at the operative time. Section 90YI will provide for the meaning of 'in force' and section 90YM will provide for the operative time for a payment split.

84. Paragraph 90YN(1)(e) will require the de facto relationship to which the agreement relates, to be broken down at the operative time.

85. Paragraph 90YN(1)(f) will provide that section 90YN applies to an interest that is not an unsplittable interest. An unsplittable interest will mean a superannuation interest prescribed by the regulations, pursuant to section 90YD. Regulation 11 of the Family Law (Superannuation) Regulations 2001 provides for when an interest is unsplittable.

86. Subsection 90YN(2) will provide that subsections 90YN(3), (4) and (5) will begin to apply to the superannuation interest at the operative time. Section 90YM will provide for the operative time for a payment split.

87. Subsection 90YN(3) will provide for the entitlement of the non-member spouse to a portion of the entitlement of the member spouse. It will provide that whenever a splittable payment becomes payable in respect of the superannuation interest, the non-member spouse will be entitled to be paid the amount (if any) that is calculated under subsection (4) and there will be a corresponding reduction in the entitlement of the member spouse-that is, the person to whom the splittable payment would have been made but for the payment split.

88. It is important to note that the trustee will not be required to pay to the non-member spouse any greater amount than the member spouse would be entitled to. It will not be possible for the agreement to provide that the non-member spouse will be entitled to greater than 100% of the member spouse's entitlement. However, it would be possible for the agreement to provide that the non-member spouse will be entitled to 100% of the member spouse's entitlement.

89. Subsection 90YN(4) will provide for the method of calculation of the amount of the payment split. As outlined above, paragraph 90YN(1)(c) provides for three different methods of calculating the amount of the payment split - the base amount, the method for calculating the base amount, and the percentage method. Each of the three methods will be appropriate to particular kinds of superannuation interests at specific times.

90. The base amount method is the most common method of payment splitting, and will be appropriate for a payment split in the accumulation phase. The percentage method is usually most appropriate for interests in the payment phase rather than the accumulation phase. This is because this method can impact on the contributions received after the agreement is made and before the split.

91. The note to subsection 90YN(1) highlights that the base amount is used to calculate the entitlement of the non-member spouse under the Family Law (Superannuation) Regulations 2001.

92. It is intended that once the operative time has been reached, and the payment splits have commenced, the parties will not subsequently be able to agree to 're-merge' the superannuation interest. Accordingly, subsection 90YN(5) will provide that section 90YN will continue to apply to the superannuation interest even if the agreement later ceases to be in force. It will be possible, however, for a court to cancel a payment split, pursuant to section 90YZL of the Bill.

Subdivision C - Payment flagging

90YO - Operative time for payment flag

93. The practical effect of a payment flag is to 'injunct' the trustee so that no payments pursuant to the superannuation interest are made. This section replicates the effect of existing section 90XK of Part VIIIB of the FLA, so as to apply to parties to a de facto relationship in Western Australia.

94. Section 90YO of new Part VIIIC of the FLA will provide that, if the fund is a self-managed superannuation fund, the operative time for a payment flag under a superannuation agreement is the time when a copy of the agreement about the payment flag, together with the prescribed accompanying documents, is served on the trustee. If the eligible superannuation plan is not a self-managed superannuation fund within the meaning of the SIS Act, then the operative time will be the beginning of the fourth business day after the day on which the service time occurs. This additional time is provided to accommodate possible delays between the service time and the time when the paperwork can be processed within larger superannuation funds.

95. Any agreement about the payment flag will be made in the context of the breakdown of the de facto relationship. Therefore, in order for an agreement about the payment flag to be operative, parties will need to declare that their relationship has broken down.

96. Paragraph 90YO(2)(a) will, therefore, provide that the operative time for a payment flag under a superannuation agreement is the time when a copy of the agreement is served on the trustee together with a separation declaration, with a declaration time that is not more than 28 days before the service on the trustee.

97. It may be necessary, in order to ensure that the agreement about the payment flag becomes operative in appropriate circumstances, and does not become operative in inappropriate circumstances, that a further declaration by one or both of the parties is required. For this reason, paragraph 90YO(2)(b) will provide that, in addition to the requirements of subsection 90YO(1), the regulations may provide for a further declaration. If such a further declaration is required, then the operative time will not be reached until such further declaration has also been made.

90YP - Payment flag

98. A superannuation agreement may provide for a payment flag. It is envisaged that parties may choose to make an agreement to flag a superannuation interest in circumstances where a condition of release (such as retirement) is likely to occur reasonably soon, at which time the actual value of the superannuation interest will become known. Section 90YP will provide for the operation of this payment flag. This section replicates the effect of existing section 90XL of Part VIIIB of the FLA, so as to apply to parties to a de facto relationship in Western Australia.

99. Subsection 90YP(1) will provide that the provision will apply to a superannuation interest if:

(a)

the interest is identified in a superannuation agreement (paragraph 90YP(1)(a)); and

(b)

the agreement provides that the interest is to be subject to a payment flag (paragraph 90YP(1)(b));

(c)

the agreement is in force at the operative time (paragraph 90YP(1)(c)). Section 90YO will provide for the definition of the operative time of a payment flag; and

(d)

the interest with which the agreement deals is not an unflaggable interest (paragraph 90YP(1)(d)). Section 90YD will provide for the definition of unflaggable interest.

100. Subsection 90YP(2) will provide that a payment flag starts to operate on the superannuation interest at the operative time for a payment flag, as provided for in section 90YO of the Bill. Subsection 90YP(2) of the Bill will also provide that a payment flag continues to operate until either:

(a)

a court terminates the operation of the payment flag, by an order made pursuant to section 90YR (paragraph 90YP(2)(a)); or

(b)

a flag lifting agreement is served on the trustee, pursuant to section 90YM, in respect of the superannuation interest (paragraph 90YP(2)(b)).

101. Section 90YS will provide for the making of a flag lifting agreement. It will not be possible to make a binding flag lifting agreement other than in accordance with section 90YS. For this reason, subsection 90YP(3) of the Bill will provide that if a payment flag ceases to operate because a flag lifting agreement has been served on the trustee (pursuant to paragraph 90YP(2)(b)), this cessation will not be affected by a later termination of the flag lifting agreement. That is, the termination of a flag lifting agreement, pursuant to subsection 90YS(2), will not automatically resurrect the payment flag. If parties terminate a flag lifting agreement and also want to resurrect the payment flag, it will be necessary for them to make a new agreement pursuant to section 90YP.

102. As outlined above, the practical effect of a payment flag operating on a superannuation interest is to prevent the trustee making any splittable payment in respect of the interest. It is an offence, for which the penalty will be 50 penalty units, for the trustee to make any splittable payment in respect of the interest.

103. Subsection 90YP(5) will provide that the penalty in subsection (4) will not apply if the splittable payment is made in circumstances in which section 90YQ applies (that is, where a successor fund transfer has occurred). A note is included stating that a defendant bears an evidential burden in relation to this matter as per the principle codified in subsection 13.3(3) of the Criminal Code. It is appropriate for the evidential burden to be placed on the superannuation trustee (defendant) as the facts in relation to whether a successor fund transfer has occurred would be peculiarly within the knowledge of that person.

104. When a splittable payment becomes payable, and if a payment flag is operating, the trustee will not be able to make any payment in respect of the interest. Parties need to know that a splittable payment would have become payable but for the payment flag, in order that they can decide what they want to do with the superannuation interest.

105. Subsection 90YP(6) will provide that if a splittable payment becomes payable in respect of a superannuation interest while a payment flag is operating, the trustee must, within 14 days after it became payable, give written notice to the member spouse and the non-member spouse. It will be an offence, for which the penalty will be 50 penalty units, not to comply with this requirement.

106. The trustee will only be required to give notice to the parties on the first occasion that a splittable becomes payable. Subsection 90YP(7) of the Bill will provide that subsection (6) does not apply if the trustee has previously given notice for an earlier splittable payment in respect of the payment flag. A note is included stating that a defendant bears an evidential burden in relation to the matter in this subsection as per the principle codified in subsection 13.3(3) of the Criminal Code. It is appropriate for the evidential burden to be placed on the superannuation trustee (defendant) as the fact of whether it has previously given notice under subsection 90YP(6) for an earlier splittable payment would be peculiarly within the knowledge of that person.

107. While a payment flag is operating and either of the parties to a de facto relationship dies, it is necessary to provide for such an event. Subsection 90YP(8) will provide that in such circumstances:

(a)

the payment flag will continue to operate (paragraph 90YP(8)(a)); and

(b)

the legal personal representative of the deceased party will have all the rights the deceased party would have had in respect of the payment flag (paragraph 90YP(8)(b)).

108. A note is included stating that the rights of the legal personal representative under paragraph (b) will include the right to enter into a flag lifting agreement under section 90YS, so that the flag can be lifted and payments made in accordance with the agreement.

90YQ - Some splittable payments payable if payment flag operating

109. Section 90YQ provides for some splittable payments to be payable in circumstances where a payment flag is operating. This section replicates the effect of existing section 90XLA of Part VIIIB of the FLA, so as to apply to parties to a de facto relationship in Western Australia.

110. Subsection 90YQ(1) will provide for when the section applies. Where there is a superannuation interest in an eligible superannuation plan that is identified in a superannuation agreement, and a payment flag is operating over that agreement, section 90YQ will apply if the trustee of the superannuation plan (the old ESP) makes a splittable payment to the trustee of another eligible superannuation plan (the new ESP) as part of a successor fund transfer.

111. Subsection (3) will provide a definition of successor fund transfer. This will mean the transfer of a person's superannuation interest in the old ESP in circumstances where:

a)

the new ESP confers on the person equivalent rights to the rights that the person had in relation to the original interest and;

b)

before the transfer, the trustee of the new ESP had agreed with the trustee of the old ESP to the conferral of such rights.

112. A successor fund transfer is a transfer of a superannuation plan's (the old ESP's) existing members to a different fund (the new ESP).

113. The effect of this provision is that a payment flag will not prevent a payment of the superannuation interest of a member that is subject to a payment flag, from the old ESP to the new ESP, if the payment is done as part of a successor fund transfer.

114. Subsection 90YQ(2) will provide that the new interest in the new ESP is taken to be the original interest identified in the superannuation agreement and the payment flag operates on the new interest. Despite section 90YO, the operative time for the payment flag in respect of the new interest will be the time that the payment to the trustee of the new ESP is made.

90YR - Payment flag may be terminated by court

115. Section 90YR of new Part VIIIC will provide that if the Family Court of Western Australia or the Magistrates Court of Western Australia, makes an order under the FCA setting aside a Western Australian financial agreement in respect of which a payment flag is operating, the court may also make an order terminating the operation of the payment flag.

116. A note is included to explain that under section 90YK, a superannuation agreement relating to a de facto relationship must be part of a Western Australian financial agreement. Therefore, setting aside the Western Australian financial agreement would also have the effect of setting aside the superannuation agreement.

90YS - Flag lifting agreement etc.

117. The effect of a payment flag agreement is to prevent, or 'injunct' a trustee from making any payments in respect of the superannuation interest that has been flagged. If at a later date, the parties to a de facto relationship wish to make an agreement to deal with the superannuation interest, it will be necessary for the flag to be lifted before the interest can be dealt with.

118. Section 90YS of new Part VIIIC will provide for the parties to make an agreement to lift a payment flag. In agreeing to lift a payment flag, the parties may merely want to lift the flag and not subsequently split the interest. Alternatively, the parties may also want to provide for a payment split of the superannuation interest.

119. Subsection 90YS(1) of new Part VIIIC will provide that at any time when a payment flag is operating on a superannuation interest, the parties may make a flag lifting agreement that either:

(a)

provides that the flag is to cease operating without any payment split (paragraph 90YS(1)(a)); or

(b)

specifies a payment split pursuant to paragraph 90YN(1) (paragraph 90YS(1)(b)).

120. After making a flag lifting agreement that provides for a payment split, parties may wish to terminate the payment split. Subsection 90YS(2) of new Part VIIIC will provide for this circumstance. It will only be possible to terminate the payment split prior to the operative time.

121. If the flag lifting agreement merely provides that the flag is to cease operating, the parties cannot later terminate that agreement. This is because there would be no point in doing so, as terminating a flag lifting agreement does not have the effect of resurrecting the flag. As outlined above, the only way that a payment flag can be put in place is by a specific payment flag agreement.

122. Subsection 90YS(3) of new Part VIIIC will set out the formal requirements for a flag lifting agreement and a termination agreement to have effect:

(a)

the agreement is signed by both parties to the de facto relationship (paragraph 90YS(3)(a));

(b)

for each party, the agreement contains a statement that the party has been provided with independent legal advice from a legal practitioner as to the legal effect of the agreement (paragraph 90YS(3)(b));

(c)

a certificate is attached to the agreement, signed by the person who provided the legal advice and stating that the advice was provided (paragraph 90YS(3)(c)); and

(d)

after the agreement is signed by the parties, each party is given a copy of the agreement (paragraph 90YS(3)(d)).

123. Subsection 90YS(4) of the Bill will provide that the Family Court of Western Australia or the Magistrates Court of Western Australia may make an order setting aside the flag lifting agreement or termination agreement if the court is satisfied of certain things. These include, amongst other things, that the agreement was obtained by fraud, or for the purposes of defeating a creditor, or for the purposes of defeating the interests of another person (for example in relation to other family law proceedings). These grounds recognise and preserve the interests of persons that might be affected by orders or superannuation agreements in other related matters.

124. Subsections 90YS(5) and (6) provide definitions of 'creditor' and 'caring responsibility' for the purposes of paragraphs 90YS(4)(b) and (g).

125. An order setting aside a flag lifting agreement would not, of itself, affect the related superannuation agreement, since the flag lifting agreement is not a superannuation agreement pursuant to Part VIIIC. Subsection 90YS(7) will therefore provide that an order setting aside a flag lifting agreement also operates to set aside the related superannuation agreement.

126. Subsection 90YS(8) will provide that when an order is made by the Family Court of Western Australia or the Magistrates Court of Western Australia under the FCA setting aside a Western Australian financial agreement that has a related flag lifting agreement, the court must also make an order setting aside the flag lifting agreement. This is because a superannuation agreement made under Part VIIIC, which includes a flag lifting agreement, will form part of a Western Australian financial agreement made under Part 5A of the FCA (see section 90YK). As such, if the Western Australian financial agreement is set aside, the related superannuation agreement must also be set aside. The grounds in subsection (4) of this section for the court to make an order setting aside a flag lifting agreement do not apply to the order setting aside the flag lifting agreement.

127. Subsection (8) includes a note to explain that in circumstances where a court makes an order setting aside a flag lifting agreement, the court has the discretion to make an order under section 90YX in relation to the distribution of superannuation interest.

Subdivision D - Miscellaneous

90YT - Limitation on section 90YX order

128. Section 90YT replicates the effect of existing section 90XO of Part VIIIB of the FLA, so as to apply to parties to a de facto relationship in Western Australia.

129. The intention is that parties should be able to make a superannuation agreement and, where such an agreement is binding and in force, a court will not have jurisdiction over the superannuation interest dealt with in the agreement. The agreement will oust the jurisdiction of the court.

130. Accordingly, subsection 90YT(1) will provide that a court cannot make an order under section 90YX of the FLA with respect to a superannuation interest if:

•

the superannuation interest is covered by a superannuation agreement that is in force (paragraph 90YT(1)(a)); or

•

the non-member spouse has served a waiver notice on the trustee, under section 90YZQ in respect of the interest (paragraph 90YT(1)(b)). Under section 90YZQ, a non-member spouse will be able to waive his or her entitlements to future payments made pursuant to a payment split. It is envisaged that the non-member spouse would agree to a waiver in consideration for payment of an amount of money from the trustee; or

•

a payment flag is operating on the superannuation interest (paragraph 90YT(1)(c)). A payment flag will effectively prevent any dealings with the superannuation interest on which it operates.

131. The note under paragraph 90YT(1)(c) explains that if a court wishes to make an order about a superannuation interest on which a payment flag is operating, it will have to first make an order terminating the payment flag under section 90YR.

132. Subsection 90YT(2) will provide that in situations where a superannuation agreement is in force, or a waiver notice has been served, or a payment flag is in operation, the court can still take the superannuation interest into account when making other orders with respect to the property of separating de facto partners under the FCA.

90YU - Separation declaration

133. Section 90YU replicates the effect of certain subsections in section 90XS of the FLA, so as to apply to parties to a de facto relationship in Western Australia. Provisions in section 90XS that relate to married couples have not be replicated in new Part VIIIC.

134. A superannuation agreement may be made either before or during the de facto relationship or after the parties to the de facto relationship have separated. However, the intention is that superannuation agreements will only operate to split payments after the parties have separated. Therefore it is necessary for the parties to show that they have separated.

135. Section 90YU will provide for a separation declaration , which is a written declaration that may be included in a superannuation agreement, demonstrating that the parties have separated. The separation declaration will be:

•

a written declaration that complies with section 90YU (subsection 90YU(1)); and

•

signed by at least one of the parties to the de facto relationship (subsection 90YU(2)).

136. Different requirements relating to the content of a separation declaration will apply depending on whether section 90YV applies to the declaration. Section 90YV applies to the declaration if the party whose interest is being split by the agreement has superannuation interests totalling more than the low rate cap amount for the financial year in which the declaration was signed. For the 2019-20 income year, that amount is $210,000. Concessional tax arrangements apply below that amount.

137. Subsection 90YU(3) will provide that, if section 90YV applies to the declaration, the declaration must state that:

•

the parties lived in a de facto relationship; and

•

the parties separated and thereafter lived separately and apart for a continuous period of at least 12 months immediately before the declaration time; and

•

in the opinion of the party (or parties) making the declaration, there is no reasonable likelihood of cohabitation being resumed.

138. Subsection 90YU(4) will provide that, if section 90YV does not apply to the declaration, the declaration only needs to state that the parties lived in a de facto relationship, but are separated at the declaration time.

139. Subsection 90YU(5) will provide alternative requirements for the separation declaration if either or both of the parties to the de facto relationship have died.

Meaning of separation

140. Section 49 of the FLA provides for the meaning of separation and subsection 49(2) provides for the possibility of separation under one roof - that is, that the parties to a marriage may be held to have separated and lived separately and apart notwithstanding that they have continued to reside in the same residence or that one party has rendered some household services to the other.

141. Section 50 of the FLA provides for the effect of a period of resumption of cohabitation on the separation. In effect, a period of less than 3 months resumption of cohabitation does not start the 12 month clock running again. Instead, for the purposes of calculating the 12 month separation period, that period of cohabitation is not counted.

142. The intention is for these concepts to be consistently applied in the context of a separation declaration under section 90YU.

143. Subsection 90YU(6) replicates the effect of section 49 of the FLA for the purposes of section 90YU, providing that the parties to a de facto relationship can be separated and be living separately and apart even if:

•

their cohabitation was brought to an end by the action or conduct of one only of them (paragraph 90YU(6)(a)); or

•

they have continued to reside in the same residence (paragraph 90YU(6)(b)); or

•

either of them has rendered some household services to the other (paragraph 90YU(6)(c)).

144. Subsection 90YU(7) replicates the effect of section 50 of the FLA for the purposes of section 90YU, providing that, if the parties to a de facto relationship separated, but resumed co-habitation for a period of less than 3 months, before separating once again, that:

•

the periods of living separately and apart before and after the period of resumed cohabitation may be aggregated as if they were one continuous period (paragraph 90YU(7)(a)); but

•

the period of cohabitation shall not be taken to be part of the period of living separately and apart (paragraph 90YU(7)(b)).

90YV-Superannuation interests in excess of low rate cap amount

145. Section 90YV replicates the effect of existing section 90XQ of the FLA, so as to apply to parties to a de facto relationship in Western Australia.

146. As outlined above for new section 90YU, the parties will be required to make a more comprehensive 'separation declaration' if the superannuation interests exceed the 'low rate cap amount'. Section 90YV will provide for when this fuller separation declaration will be required.

147. Subsection 90YV(1) will provide that section 90YV applies to a separation declaration if, at the declaration time, the 'total withdrawal value' for all the superannuation interests of the member spouse is more than the member spouse's 'low rate cap amount' for the income year in which that time occurs.

148. There may be circumstances where it would be inappropriate for the parties to have to make the fuller declaration as to the status of their de facto relationship. Subsection 90YV(2) will provide that section 90YV will not apply in the circumstances (if any) prescribed by the regulations.

149. Subsection 90YV(3) will provide definitions for the terms low rate cap amount and total withdrawal value that will be used in this section.

•

The low rate cap amount is determined in accordance with the Income Tax Assessment Act 1997. For the 2019-20 income year, that amount is $210,000.

•

The term 'total withdrawal value' means an amount determined in accordance with the regulations. The Family Law (Superannuation) Regulations 2001 provide, in regulation 20, that total withdrawal value is the amount determined by adding together the withdrawal benefits for each superannuation interest the member spouse has in any eligible superannuation plan at a particular time.

90YW - Enforcement by court order

150. Section 90YW replicates the effect of existing section 90XR of Part VIIIB of the FLA, so as to apply to parties to a de facto relationship in Western Australia.

151. Under Division 2 of new Part VIIIC, the trustee will be required to take certain actions in order to implement a superannuation agreement to either split payments or to flag a superannuation interest. To support such agreements, it is necessary to give the court the power to make enforcement orders.

152. Subsection 90YW(1) will provide that a court may make such orders as it thinks necessary for the enforcement of a payment split or payment flag under Division 2 of new Part VIIIC.

153. Subsections 90YW(2) and (3) of new Part VIIIC will replicate in effect, the provisions in existing section 90KA of the FLA, which relate to the enforcement, validity and effect of financial agreements more generally.

Division 3 - Payment splitting or flagging by court order

Subdivision A - Orders in relation to superannuation interests

90YX - Orders in relation to superannuation interests

154. Section 90YX empowers the court to make orders in relation to the superannuation interests of the parties to a de facto relationship in Western Australia.

155. Subsection 90YX(1) will provide that the Family Court of Western Australia or the Magistrates Court of Western Australia may make orders in relation to the superannuation interest in accordance with Division 3 of new Part VIIIC. It is likely that such orders would be made in the context of an overall property settlement with respect to the property of de facto partners, under Part 5A of the FCA, however, there may also be cases where superannuation is the only asset available to the separating parties, so the parties are only involved in Part VIIIC proceedings in the court.

156. Given that Part VIIIC only applies to de facto couples in Western Australia, parties who wish to apply for orders under section 90YX must satisfy a geographical requirement. Note 1 to section 90YX directs readers to this requirement in section 90YZB.

157. Section 90YZC requires parties to have been in a de facto relationship for at least two years (with certain exceptions). Note 2 to section 90YX directs readers to this requirement.

158. Note 3 indicates that subsections 44(7) and (9) and new sections 90YT and 90YZD limit the scope of the Family Court of Western Australia or the Magistrate Court of Western Australia to make orders in relation to superannuation interests under Part VIIIC.

•

Subsections 44(7) and (9) provide for the instituting of proceedings under Part VIIIC.

•

Section 90YT provides that a court cannot make an order under section 90YX if there is a superannuation agreement in force, or the non-member spouse has served a waiver notice on the trustee, or a payment flag is operating on the superannuation interest.

•

Section 90YZD provides a number of other rules relating to proceedings under section 90YX.

159. Subsection 90YX(2) will provide that the Family Court of Western Australia or the Magistrates Court of Western Australia cannot make an order in relation to a superannuation interest except in accordance with new Part VIIIC.

90YY - Splitting order

160. Section 90YY replicates the effect of existing section 90XT of Part VIIIB of the FLA, so as to apply to parties to a de facto relationship in Western Australia.

161. Subsection 90YY(1) will provide for the orders that a court is able to make in relation to splitting a superannuation interest.

162. The intention is that the court should be able to make an order that mirrors, to the extent possible, any superannuation agreement that is able to be made pursuant to section 90YN. That is, the court should be able to make an order specifying an amount to be paid to the non-member spouse. This includes the court making an order that specifies a percentage of the whole, or a portion, of the splittable payment is to be paid to the non-member spouse.

163. Paragraph 90YY(1)(a) of new Part VIIIC will provide for one type of order that can be made if the interest is not a percentage-only interest. It will provide that whenever a splittable payment becomes payable in respect of the superannuation interest, a court may make a splitting order, which has the effect that:

•

the non-member spouse is entitled to be paid the amount (if any) calculated in accordance with the regulations (subparagraph 90YY(1)(a)(i)), and

•

there is a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for the order (subparagraph 90YY(1)(a)(ii)).

164. Paragraph 90YY(1)(b) will enable the court to make a splitting order that specifies a percentage to be paid to the non-member spouse. Such an order will have the effect that the non-member spouse is entitled to be paid a specified percentage of the splittable payment and for a corresponding reduction to the member's entitlement.

165. Paragraph 90YY(1)(c) will provide that if the interest is a percentage-only interest, the court may make an order to the effect that whenever a splittable payment becomes payable, the non-member spouse is entitled to be paid an amount calculated in accordance with the regulations, by reference to the percentage specified in the order.

166. Paragraph 90YY(1)(d) will provide that a court will also be able to make such other orders as it thinks necessary for the enforcement of an order made under paragraphs 90YY(1)(a), (b) or (c).

167. Subsection 90YY(2) will provide that if the regulations prescribe a method of determining the value of the interest, then the court must determine the value in accordance with the regulations. However, it will also provide that if the regulations do not provide such a method, then the court must determine the value of the superannuation interest as it considers appropriate. The relevant regulations are the Family Law (Superannuation) Regulations 2001. The amount determined is taken to be the value of the interest (subsection 90YY(3)).

168. Subsection 90YY(4) will provide that regulations may provide for the value of the superannuation interest to be determined wholly or partly by reference to methods or factors that are approved by the Minister for the purposes of the regulations.

169. Subsection 90YY(5) of new Part VIIIC will provide that, before making an order for an interest that is not a percentage-only interest, the court must allocate a base amount to the non-member spouse, not exceeding the value determined under subsection 90YY(2).

90YZ - Flagging order

170. Section 90YZ replicates the effect of existing section 90XU of Part VIIIB of the FLA, so as to apply to parties to a de facto relationship in Western Australia.

171. In certain circumstances a court may consider it more appropriate to make a flagging order in relation to a superannuation interest, rather than a splitting order. Section 90YZ will provide for flagging orders, which can be made on a superannuation interest that is not prescribed to be an unflaggable interest.

172. Subsection 90YZ(1) will provide that a court may make a flagging order in relation to a superannuation interest, which is not an unflaggable interest, that directs the trustee not to make a splittable payment in respect of the interest without the leave of the court (paragraph 90YZ(1)(a)).

173. In order to lift a flagging order, parties will need to know when a payment would become payable if it were not for the flagging order. Therefore, paragraph 90YZ(1)(b) will provide that the flagging order will also require the trustee to notify the court of the next occasion when a splittable payment becomes payable in respect of the superannuation interest that is dealt with in the order. The court order will specify the period within which the trustee is required to provide such notice to the court.

174. When a court is called upon to make a property settlement, the actual value of the superannuation interest may be unknown, but will become known in the very near future. While the regulations will provide for a method for valuing superannuation interests, a court may consider it more appropriate to defer a final decision on the superannuation, and in the context of some or all of the property, until the actual value of the superannuation interest is known.

175. In such circumstances, a flagging order may be appropriate. Subsection 90YZ(2) will provide that in deciding whether to make a flagging order, the court may take into account such matters as it considers relevant and, in particular, may take into account the likelihood that a splittable payment will soon become payable in respect of the superannuation interest.

90YZA - Some splittable payments may be made without leave of court

176. Section 90YZA replicates the effect of existing section 90XUA of Part VIIIB of the FLA, so as to apply to parties to a de facto relationship in Western Australia.

177. Subsection 90YZA(1) will provide that a flagging order made under subsection 90YZ(1) in relation to a superannuation interest in an eligible superannuation plan (ESP), will not apply to a 'successor fund transfer' made to the trustee of a new ESP.

178. Instead, subsection 90YZA(2) will provide that the flagging order will, in effect, follow the transfer of the superannuation interest to the new ESP.

179. Subsection 90YZA(3) will define successor fund transfer for the purposes of section 90YZA to mean the transfer of a person's superannuation interest in the old ESP in circumstances where:

•

the new ESP confers on the person, in relation to the new interest, equivalent rights to the rights the person had in relation to the original interest (paragraph 90YZA(3)(a)); and

•

before the transfer, the trustees of the new and old ESPs agree to the conferral of such rights (paragraph 90YZA(3)(b)).

180. A successor fund transfer is a transfer of a superannuation plan's (the old ESP's) existing members to a different fund (the new ESP).

90YZB - Geographical requirement

181. This provision replicates the geographical requirements set out in section 205X of the FCA. It requires that a court must be satisfied, before making an order for property adjustment or maintenance in relation to a de facto relationship, that the parties to the application have a sufficient connection with Western Australia.

182. Specifically, before making a splitting or flagging order, a court must be satisfied that one or both of the parties to the application were resident in Western Australia on the day on which the application was made (paragraph 90YZB(a)). In addition, that either or both parties have resided in Western Australia for at least one third of the duration of their de facto relationship (subparagraph 90YZB(b)(i)), or a substantial contribution to the property of the de facto relationship was been made in the State by the applicant (subparagraph 90YZB(b)(ii)).

90YZC - Length of relationship etc.

183. This provision replicates the length of relationship requirements set out in section 205Z of the FCA. It provides that a court may make an order for property adjustment or maintenance, in relation to a de facto relationship, only if certain conditions are met relating to the length, or other aspects of, the de facto relationship.

184. Specifically, a court may only make a splitting or flagging order if satisfied:

•

that there has been a de facto relationship between the parties for at least two years (paragraph 90YZC(1)(a)); or

•

there is a child of the de facto relationship (paragraph 90YZC(1)(b)); or

•

one party to the de facto relationship has made a substantial contribution and failure to make the order would result in serious injustice to that party (paragraph 90YZC(1)(c)).

185. Subsection 90YZC(2) will provide that in deciding the length of a relationship, the court must consider whether there has been a break in the continuity of the relationship, and if there has been a break, the length of the break and the extent of the breakdown in the relationship.

186. Subsection 90YZC(3) will clarify that the Court is not limited to the matters outlined in subsection 90YZC(2) when deciding if there has been a de facto relationship between the spouses for at least two years.

90YZD - Other rules relating to proceedings under section 90YX

187. Section 90YZD largely replicates the effect of existing subsections 90SM(2) to (20) of Part VIIIB of the FLA, so as to apply to proceedings under section 90YX in relation to the superannuation interests of separating de facto couples in Western Australia.

188. Subsection 90YZD(1) will provide for circumstances where a party to a de facto relationship dies after breakdown of that relationship, allowing an order made under section 90YX to be enforced on behalf of, or against, the estate of the decreased party.

189. Subsection 90YZD(2) will provide that a court must not make an order under section 90YX unless satisfied that, in all the circumstances, it is just and equitable to make the order. Subsection 90YZD(3) will provide that such circumstances include any other orders made, or proposed to be made, under section 205ZG of the FCA.

190. Subsection 90YZD(4) will provide a number of factors that the court must take into account, when considering what order to make (if any) under section 90YX. These factors largely replicate the factors in subsections 90SM(4) and 90SF(3) of the FLA. The matters required to be considered in these subsections are similar to matters provided for in subsections 205ZG(4) and 205ZD(3) of the FCA, however, they also include factors relevant to circumstances where a bankruptcy trustee may be involved in the proceedings.

191. Subsections 90YZD(5) and (6) will provide for the adjournment of proceedings under section 90YX, and for the making of orders before so adjourning proceedings.

192. Subsection 90YZD(7) will allow the court, in forming an opinion about whether to adjourn proceedings under subsection 90YZD(5), to consider certain factors. These include whether there is likely to be a significant change in the financial circumstances of either, or both, of the de facto partners, by reason of being a contributor to a superannuation fund or scheme, or any scheme or arrangement that is in the nature of a superannuation scheme.

193. Subsection 90YZD(8) provides for circumstances where a party to a de facto relationship dies after the breakdown of that relationship, but before proceedings under section 90YX have been completed. Provision is made for the continuation of proceedings and the making of orders that the court considers appropriate, with respect to the superannuation interests of the parties, and allows for such orders to be enforced on behalf of, or against, the estate of the deceased party.

194. Subsection 90YZD(9) will prevent the court from making an order under section 90YX unless the parties have attended a conference with a person referred to in subsection 205ZG(9) of the FCA. The persons referred to in subsection 205ZG(9) of the FCA include the Principal Registrar, registrar or a deputy registrar of the court. Paragraphs 90YZD(9)(b) and (c) provide exceptions from this requirement if the court is satisfied that it is appropriate to make the order due to reasons of urgency, other special circumstances, or it is not practicable to require the parties to attend a conference.

195. Subsection 90YZD(10) deals with persons who are entitled to become a party to section 90YX superannuation splitting proceedings in relation to a Western Australian de facto relationship. It allows for third party involvement in de facto superannuation splitting proceedings by a person who is a creditor of a party to the proceedings, or a party to another related de facto relationship or a related marriage who may have affected interests that are actionable under Part VIIIAB or Part VIII in their own right. Subsections 90YZD(12) and (13) provide that a third party in these circumstances may apply in the proceedings in their own right for an order under section 90YX, or equivalent orders or declarations under sections 79 and 78 respectively, in relation to the de facto relationship or marriage to which they are a party.

196. The powers of the court under section 90YX also extend to making orders altering the interests of the bankruptcy trustee in relation to vested bankruptcy property, and orders requiring one or both of the parties to the de facto relationship or the bankruptcy trustee to make a settlement or transfer of property for the benefit for the benefit of either or both of the parties to a de facto relationship, or a child of the relationship. Subsections 90YZD(14) to (20) provide for the joining of related pending proceedings by the trustee in bankruptcy and the trustee of a personal insolvency agreement to the relevant section 90YX proceedings between the parties to the de facto relationship.

90YZE - Varying and setting aside of orders under section 90YX

197. Section 90YZE replicates the effect of section 90SN of the FLA for orders made under section 90YX by the Family Court of Western Australia or the Magistrates Court of Western Australia with respect to a superannuation interest of a Western Australian de facto couple.

198. Section 90YZE allows for a person affected by a section 90YX order to apply for a variation or setting aside of that order. The intention is to enable the court to vary, set aside or make another splitting or flagging order, in the same circumstances as for other orders relating to the alteration of property interests made under section 90SN of the FLA.

199. Circumstances for varying or setting aside an order would include where there has been a miscarriage of justice by reason of fraud etc (paragraph 90YZE(1)(a)), or circumstances have arisen making it impracticable for the order to be carried out (paragraph 90YZE(1)(b)); or a person has defaulted in carrying out an obligation under the order and as a result it is just and equitable to substitute a new order (paragraph 90YZE(1)(c)); or exceptional circumstances have arisen in relation to the care, welfare and development of a child of the de facto relationship (paragraph 90YZE(1)(d)); or a proceeds of crime order has been made covering the property of either party or against either party (paragraph 90YZE(1)(e)).

200. Subsection 90YZE(2) will provide that parties to an order under section 90YX may apply for it to be varied or set aside. If both parties agree, the court may do so and may, if appropriate, make another order.

201. Subsection 90YZE(3) will define 'caring responsibility' for the purposes of paragraph 90YZE(1)(d).

202. Subsections 90YZE(4) and (5) will provide for circumstances where a party to a de facto relationship dies. Under subsection (4), an order varied or made under subsections 90YZE(1) or (2) may be enforced on behalf of, or against, the estate of the decreased party. Under subsection (5), proceedings in relation to varying or setting aside an order under 90YX may be continued against the legal personal representative of the deceased if the court is of the opinion it would have varied or set aside the order had the deceased not died, and it is still appropriate to vary or set aside the order.

203. Subsection 90YZE(6) provides that the court must have regard to the interests of, and must make any order proper for the protection of, a bona fide purchaser or other person interested when exercising powers under subsections (1), (2) or (5).

204. Subsections 90YZE(7) to (10) provide for circumstances where a party to the de facto relationship was a bankrupt or becomes a bankrupt. Subsection (7) provides that a creditor is taken to be a person whose interests are affected by the order under section 90YX if the creditor may not be able to recover their debt due to the order being made. Subsections (8) and (9) provide for when the bankruptcy trustee is taken to be a person whose interests are affected by the order. Subsection (10) provides for when the trustee of a personal insolvency agreement is taken to be a person whose interests are affected by the order.

Subdivision B - Notification of application

90YZF, 90YZG, 90YZH and 90YZI

205. This Subdivision sets out procedural matters that may be provided for in the Western Australian Rules of Court to require:

•

notice by an applicant for an order, or a party to proceedings for an order, under Division 3, to be given to a third party, or the bankruptcy trustee, or the trustee of a personal insolvency agreement of the application: section 90YZF

•

notice by a bankrupt party to proceedings, or debtor subject to a personal insolvency agreement who becomes a party to proceedings under section 90YX or 90YZE to be given to the bankruptcy trustee: section 90YZG

•

notice by a party to a de facto relationship that has broken down who is a party to proceedings for an order under Division 3, to be given to the court about a party becoming a bankrupt or subject to a personal insolvency agreement, or of the institution of proceedings under the Bankruptcy Act 1966: subsections 90YZH(1) to (3)

•

notice by the bankruptcy trustee of a bankrupt party to a de facto relationship that has broken down to be given to the court of the trustee applying under section 139A of the Bankruptcy Act 1966 for an order under Division 4A of Part VI of that Act: subsection 90YZH(4). For the purposes of section 90YZH, an application for an order under section 90YX or 90YZE is taken to be finally determined when the application is withdrawn or dismissed, or an order other than an interim order is made as a result of the application: 90YZH(5)

•

notice by the bankruptcy trustee of a bankrupt party to a de facto relationship to be given to a non-bankrupt de facto party of an application under section 139A of the Bankruptcy Act 1966 for an order under Division 4A of Part VI of that Act in relation to an entity, if the bankruptcy trustee is aware that the de facto relationship has broken down and that either party to the de facto relationship is a party to proceedings under Part VIIIC: section 90YZI.

206. Sections 90YZF to 90YZI replicate, for Western Australian de facto property proceedings, the effect of sections 90SO to 90SR in Part VIIIAB applicable to de facto property matters in the other states and territories.

Subdivision C - Duty of court to end financial relations

90YZJ - Duty of court to end financial relations

207. Section 90YZJ replicates the effect of existing section 90ST of Part VIIIB of the FLA, so as to apply to parties to a de facto relationship in Western Australia.

208. Section 90YZJ will provide that for proceedings under section 90YX, the court must, as far as practicable, make such orders as will finally determine each party's claim on the other party's superannuation interests following the breakdown of the de facto relationship. The intention is to avoid the need for further proceedings between the parties in relation to their superannuation interests, in the context of an overall property settlement for a separating de facto couple in Western Australia.

Subdivision D - Orders and injunctions binding third parties

90YZK - Orders and injunctions binding third parties

209. Section 90YZK provides for Part VIIIAA of the FLA (the provisions of which enable a court to bind persons other than a party to a marriage to give effect to property settlements between parties to a marriage) to have, with necessary modifications, an extended operation in relation to orders and injunctions, or proceedings for orders or injunctions, under Division 3 of new Part VIIIC relating to the superannuation interests of parties to a de facto relationship in Western Australia.

Division 4 - General provisions about payment splitting

90YZL - Court may cancel payment split

210. Termination of a superannuation agreement will not, of itself, cancel a payment split. It is therefore necessary to provide that a court may cancel a payment split in appropriate circumstances. This provision replicates section 90XV of Part VIIIB of the FLA, so as to apply to parties to a de facto relationship in Western Australia.

211. Subsection 90YZL(1) will provide that a court may, under section 90YX, make an order terminating the operation of a payment split if:

•

the superannuation agreement in respect of the payment split has ceased to be in force (paragraph 90YZL(1)(a)); and

•

the non-member spouse has not served a waiver notice on the trustee, under section 90YZQ, in respect of the payment split (paragraph 90YZL(1)(b)).

212. Under section 90YZQ, a non-member spouse will be able to waive his or her entitlements to future payments made pursuant to a payment split. It is envisaged that the non-member spouse would agree to a waiver in consideration for payment of an amount of money from the trustee.

213. Subsection 90YZL(2) of new Part VIIIC will provide that the termination of the operation of a payment split has effect for splittable payments that become payable after the date specified in the order. This will mean, in effect, that the termination of a payment split is not retrospective and that any payments made pursuant to a payment split, before it is terminated, are not affected.

90YZM - Deductions from splittable payment before calculating payment split

214. Section 90YZM replicates the effect of existing section 90XW of Part VIIIB of the FLA, so as to apply to parties to a de facto relationship in Western Australia.

215. A superannuation interest may attract deductions, for example deductions pursuant to the superannuation surcharge legislation that are payable by the superannuation plan. The trustee will be able to make these deductions before having to make any payments pursuant to the payment split.

216. Section 90YZM will provide that any deductions the trustee is entitled to make from a splittable payment are to be deducted from the splittable payments before calculating the payment split, and specifically before applying section 90YZN.

90YZN - Multiple payment splits applying to the same splittable payment

217. Section 90YZN replicates the effect of existing section 90XX of Part VIIIB of the FLA, so as to apply to parties to a de facto relationship in Western Australia.

218. A member spouse may have been through multiple relationship separations. In such circumstances, there may be more than one payment split operating on the same superannuation interest. Subsection 90YZN(1) will provide that section 90YZN applies if two or more payment splits apply to the same splittable payment.

219. Subsection 90YZN(2) will provide that the various payment splits, in the event of multiple relationship separations, will be calculated in order of their operative times. The intention of this provision is that previous non-member spouse(s) are not disadvantaged by subsequent de facto relationship(s) or marriage(s) of the member spouse.

220. Subsection 90YZN(3) will provide for the method of calculating each of the payment splits subsequent to the original split between the first non-member spouse and the member spouse. The effect of subsection 90YZN(3) will be to reduce the amount of the splittable payment by the amount to which another person is entitled under a previous payment split.

221. The operation of subsection 90YZN(3) is outlined in the example given. This example is intended only to explain the operation of multiple payment splits and does not reflect any individual scenario. The operation of payment splits in each individual case will depend on the particular facts of that case.

90YZO - Fees payable to trustee

222. Section 90YZO replicates the effect of existing section 90XY of Part VIIIB of the FLA, so as to apply to parties to a de facto relationship in Western Australia.

223. In implementing a payment split, pursuant to a superannuation agreement or a court order, the trustee of the superannuation plan will incur administrative costs. The intention is that the trustee will be able to charge the parties for any reasonable administrative costs so incurred.

224. Subsection 90YZO(1) will provide that the regulations may allow trustees to charge reasonable fees in respect of a payment split or in respect of the operation of Part VIIIC in relation to a superannuation interest. It will also provide that the regulations may prescribe the person, or persons, liable to pay the fees. The relevant regulations are the Family Law (Superannuation) Regulations 2001. Part 7 of these Regulations provide for a trustee to charge reasonable fees in respect of a payment split or for other prescribed matters, for the purposes of subsection 90XY(1) of Part VIIIB of the FLA, the effect of which is being replicated by section 90YZO for separating de facto partners in Western Australia.

225. Subsection 90YZO(2) will provide that if a fee remains unpaid after it is due, then the trustee will be able to recover the amount unpaid from any amounts that would become payable. This will mean that, in effect, the trustee will be able to deduct the unpaid fee from the superannuation interest prior to making a payment from it.

90YZP - Superannuation preservation requirements

226. Section 90YZP replicates the effect of existing section 90XZ of Part VIIIB of the FLA, so as to apply to parties to a de facto relationship in Western Australia.

227. Section 90YZP will provide for superannuation preservation requirements. Subsection 90YZP(1) will provide that if the superannuation plan that is the subject of the payment split is a regulated fund within the meaning of the Superannuation Industry (Supervision) Act 1993 (SIS Act) or an approved deposit fund, then the entitlement of the non-member spouse will be subject to the regulations made under the SIS Act, that is, the Superannuation Industry (Supervision) Regulations 1994, which provide for the preservation of benefits at Part 7A.

228. Similarly, subsection 90YZP(2) will provide that if the superannuation plan that is the subject of the payment split is a retirement savings account within the meaning of the Retirement Savings Account Act 1997 (RSA Act) then the entitlement of the non-member spouse will be subject to the regulations made under the RSA Act, the Retirement Savings Accounts Regulations 1997, which provide for the preservation of benefits at Part 4A.

229. Most State and Territory superannuation schemes and pension schemes that provide superannuation for public servants, politicians and judges, are 'constitutionally protected funds', within the meaning of section 995-1 of the Income Tax Assessment Act 1997 and regulation 995-1.04 of the Income Tax Assessment Regulations 1997. They are not regulated by the SIS Act and associated regulations, although most of them choose to comply with the SIS regulatory regime.

230. Where such schemes are subject to laws or other instruments that provide for the preservation of benefits, the intention is to extend such preservation requirements to payments made pursuant to a payment split. Subsection 90YZP(3) will provide that if the superannuation plan for a superannuation split is a constitutionally protected fund, then the entitlement of the non-member spouse is subject to any law or other instrument that is applicable to the plan and provides for preservation of benefits.

90YZQ - Waiver of rights under payment split

231. Section 90YZQ replicates the effect of existing section 90XZA of Part VIIIB of the FLA, so as to apply to parties to a de facto relationship in Western Australia.

232. Some superannuation plans may prefer to 'pay out' the non-member spouse's entitlement under the payment split, rather than continue to make payments pursuant to the payment split.

233. In order to facilitate this, section 90YZQ of new Part VIIIC will provide for the waiver of rights under a payment split. The waiver will only be possible if the non-member spouse agrees with it, and funds will not be able to unilaterally waive the non-member spouse's entitlement. The intention is that the trustee of the fund would pay out the non-member spouse's entitlement from the entitlement of the member spouse.

234. Subsection 90YZQ(1) will provide that if the non-member spouse serves a waiver notice on the trustee in respect of a payment split, then for each splittable payment that becomes payable after the date specified in the waiver notice:

•

the non-member spouse will not be entitled to be paid any amount under the payment split in respect of the splittable payment (paragraph 90YZQ(1)(a)); and

•

the entitlement of the person to whom the splittable payment would have been made will continue to be reduced in the same way as it would have been reduced if the entitlement of the non-member spouse had not been terminated (paragraph 90YZQ(1)(b)).

235. The example following subsection 90YZQ(1) is intended to clarify the effect of the waiver notice.

236. Subsection 90YZQ(2) will provide for the formal requirements of the waiver notice, which will have to be in the prescribed form and be accompanied by:

•

a statement that the non-member spouse has been provided with independent financial advice as to the financial effect of the waiver notice (paragraph 90YZQ(2)(a)); and

•

a certificate signed by the person who provided the financial advice, stating that the advice was provided (paragraph 90YZQ(2)(b)).

90YZR - Trustee to provide information

237. Section 90YZR replicates the effect of existing section 90XZB of Part VIIIB of the FLA, so as to apply to parties to a de facto relationship in Western Australia.

238. In order to calculate the value of a superannuation interest, the parties or a court will need certain information from the trustee of the superannuation plan. Section 90YZR will require the trustee to provide that information upon application.

239. Subsection 90YZR(1) will provide that an eligible person may make an application to the trustee of a superannuation plan for information about a superannuation interest of a member of the plan.

240. Subsection 90YZR(2) will set out the formal requirements for an application for information from the trustee. Paragraph 90YZR(2)(a) will provide that the application will have to be accompanied by a declaration, in the prescribed form, stating that the applicant requires the information to assist the applicant:

•

to properly negotiate a superannuation agreement (subparagraph 90YZR(2)(a)(i)); and/or

•

in connection with the operation of new Part VIIIC in relation to the applicant (subparagraph 90YZR(2)(a)(ii)).

241. This will enable the necessary information to be obtained in order for an agreement, or a court order, to be made about a superannuation interest.

242. Paragraph 90YZR(2)(b) will provide that the application for information is to be accompanied by any fee payable under section 90YZO.

243. Subsection 90YZR(3) will provide that if the trustee receives an application for information that complies with section 90YZR, the trustee must, in accordance with the regulations, provide information about the superannuation interest to the applicant. The regulations will prescribe the particular information that the trustees will be required to provide. The penalty, should the trustee fail to comply with subsection 90YZR(3), will be 50 penalty units.

244. A trustee within the meaning of section 90YF is a person with the power to make payments with respect to a superannuation plan. Such a trustee may not necessarily be the person with the information about the superannuation interest the applicant is seeking, nor be the most appropriate trustee to provide such information. Therefore, subsection 90YZR(4) will provide that, for the purposes of subsection 90YZR(3), regulations may specify circumstances in which the trustee is not required to provide information.

245. The Family Law (Superannuation) Regulations 2001 currently exempt secondary government trustees from the requirement to provide information for the purposes of section 90XZB of Part VIIIB of the FLA (regulation 69), the effect of which is being replicated by section 90YZR for separating de facto partners in Western Australia. It is intended to amend the regulations to support the operation of section 90YZR.

246. Subsection 90YZR(5) will provide that it is an offence for the trustee to provide, in response to an application for information, any address of the member. The penalty, should the trustee fail to comply with subsection 90YZR(5), will be 50 penalty units. While it is necessary to enable a person to obtain information about a members' superannuation interest for the purposes of Part VIIIC, the privacy of members must also be protected from the inappropriate disclosure of information, to the extent possible.

247. Subsection 90YZR(6) will provide that it is an offence for the trustee to inform the member that an application for information has been received from a person other than the member. The penalty, should the trustee fail to comply with subsection 90YZR(6), will be 50 penalty units.

248. Subsection 90YZR(7) will provide that the regulations may require the trustee of an eligible superannuation plan, after the operative time for a payment split, to provide information to the non-member spouse. The regulations may also prescribe penalties, not exceeding 10 penalty units, for contravention of this subsection. The intent is for amendments to be made to the Family Law (Superannuation) Regulations 2001 to support the operation of this subsection.

249. Subsection 90YZR(8) will provide a definition of eligible person for the purposes of section 90YZR.

90YZS - Death of a non-member spouse

250. Section 90YZS replicates the effect of existing section 90XZC of Part VIIIB of the FLA, so as to apply to parties to a de facto relationship in Western Australia.

251. Section 90YZS will provide for what happens if the non-member spouse dies after the operative date for a payment split. In these circumstances:

•

the payment split will continue to operate (paragraph 90YZS(a)); and

•

the payment split will operate in favour of, and is binding on, the legal personal representative of the deceased non-member spouse (paragraph 90YZS(b)); and

•

the legal personal representative will have all the rights that the deceased non-member spouse would have had in respect of the payment split (paragraph 90YZS(c)).

Division 5 - Miscellaneous

90YZT - Orders binding on a trustee

252. Section 90YZT replicates the effect of existing section 90XZD of Part VIIIB of the FLA, so as to apply to parties to a de facto relationship in Western Australia. It will provide for the circumstances in which an order under new Part VIIIC will be binding on the superannuation trustee.

253. Subsection 90YZT(1) will provide that an order in relation to a superannuation interest may be expressed to bind the person who is the trustee of the superannuation plan at the time when the order takes effect. However, it will also provide limitations on this power.

254. It is not possible to make an order binding a third party to the proceedings unless the third party has been accorded procedural fairness in relation to the making of that order. It is intended that procedural fairness, in this context, will mean that the trustee has been given notice of the proceedings, has been informed of when the proceedings will be heard by the court, and has been given an opportunity to be heard in the proceedings.

255. Paragraph 90YZT(1)(a) will provide that the court cannot make an order binding a trustee (other than a secondary government trustee), unless the trustee has been accorded procedural fairness in relation to the making of the order.

256. In the case of a secondary government trustee, for example the Commonwealth or the State of Western Australia, who has the power to make payments to members of the superannuation plan but no other trustee powers, subparagraph 90YZT(1)(b)(i) will provide that it is not necessary for the trustee to have been accorded procedural fairness before the court can make an order. However, subparagraph 90YZT(1)(b)(ii) will provide that the court may, if it thinks fit, require that the secondary government trustee be accorded procedural fairness.

257. Subsection 90YZT(2) will provide that if an order is binding on the person who is the trustee of the superannuation plan when the order takes effect then the order will also be binding on any person who subsequently becomes the trustee of that superannuation plan.

258. An order to split a superannuation interest may take effect some considerable time before any splittable payments become payable, for example, it may be many years before the member spouse reaches a condition of release, such as reaching retirement age. The intention is that the order should continue to be binding on the trustee of the superannuation plan, even if the person who is the trustee has changed, for example, due to changes in the membership of the board of trustees after the order takes effect and before the splittable payments become payable.

90YZU - Protection for trustee

259. Section 90YZU replicates the effect of existing section 90XZE of Part VIIIB of the FLA, so as to apply to parties to a de facto relationship in Western Australia.

260. Section 90YZU will provide that the trustee of a superannuation plan is not liable for loss or damage suffered because of things done (or not done) by the trustee in good faith in reliance on:

•

any document served on the trustee for the purposes of Part VIIIC (paragraph 90YZU(a)); or

•

an order made by a court in accordance with Part VIIIC (paragraph 90YZU(b)).

261. The intention is that the trustee should not be penalised for acting in good faith. For example, if the trustee acts in reliance on a superannuation agreement that is subsequently proved to be a forgery, the trustee should not be liable for any loss or damage suffered because the trustee acted in accordance with the superannuation agreement.

90YZV - Service of documents on trustee

262. Section 90YZV largely replicates the effect of existing section 90XZF of Part VIIIB of the FLA, so as to apply to parties to a de facto relationship in Western Australia.

263. Subsection 90YZV(1) will provide for the method of service for documents required, or permitted, to be served on the superannuation trustee for the purpose of Part VIIIC, with reference to the Western Australian rules of court.

264. Subsection 90YZV(2) will provide that the method of service permitted by subsection 90YZV(1) is in addition to any other method of service permitted by law. In effect this means that service according to the Western Australian rules of court is not the only permissible method of service for documents that have to be served on the trustee.

90YZW - False declarations

265. Section 90YZW replicates the effect of existing section 90XZG of Part VIIIB of the FLA, so as to apply to parties to a de facto relationship in Western Australia.

266. Subsection 90YZW(1) will provide that a person is guilty of an offence if:

•

the person makes a statement in a declaration, knowing that the statement is false or misleading (paragraph 90YZW(1)(a)); and

•

the declaration is served on the trustee of a superannuation plan for the purposes of Part VIIIC (paragraph 90YZW(1)(b)).

267. The maximum penalty for an offence under subsection 90YZW(1) will be imprisonment for a period of up to 12 months.

268. Subsection 90YZW(2) will provide that the offence does not apply if the statement is not false or misleading in a material particular. This is followed by a note explaining that a defendant bears an evidential burden in relation to this matter under subsection 13.3(3) of the Criminal Code. It is appropriate for the evidential burden to be placed on the defendant, as the facts in relation to the veracity of statements in a declaration to which section 90YZW applies would be peculiarly within the knowledge of that person.

269. Subsection 90YZW(3) will have the effect that a person is not guilty of the offence if the party to which the declaration relates died before the declaration was made. Where that party has died, the declaration might be made by the deceased party's legal personal representative. In those circumstances, criminal sanctions for the making of a statement in the declaration are inappropriate given that the legal personal representative will have no first-hand knowledge of the state of the party's de facto relationship before he or she died. However, it is a matter for the legal personal representative to discharge the burden that these circumstances exist.

90YZX - Terminating employment because of payment flag etc.

270. The Bill will provide that a person will not be able to discriminate against an employee on the basis that their superannuation interest has been dealt with under new Part VIIIC. Section 90YZX replicates the effect of existing section 90XZH of Part VIIIB of the FLA, so as to apply to parties to a de facto relationship in Western Australia.

271. This section will provide that a person must not terminate the employment of an employee because a payment flag is operating in respect of a superannuation interest of the employee (paragraph 90YZX(a)) or because a superannuation agreement or splitting order is in force in respect of a superannuation interest of the employee (paragraph 90YZX(b)). The penalty for both offences will be 100 penalty units.

Items 5-9 - Subsections 94(1), After subsection 94AAA(2), After section 94AAB and subsection 96(1AA) (note).

272. These amendments provide for the appellate pathway that would apply to superannuation splitting proceedings under Part VIIIC of the Family Law Act. Items 5 to 9 would amend certain appeal provisions in Part X of the Family Law Act to provide that appeals of decisions made under Part VIIIC lie to the Supreme Court of Western Australia. This will ensure that de facto couples will have a single appeal pathway for their family law property disputes.

Item 9 - Subsection 123(1)

273. This amendment is consequential to the rule-making power that will be provided to the Western Australian authority responsible for making rules followed by the Family Court of Western Australia and the Magistrates Court of Western Australia under section 90YJ of the Bill. It will provide that the application of the rules of court provided for in section 123 of the Family Law Act 1975 (Cth) is subject to new section 90YJ of the Bill.

Schedule 2 - Amendment of the Bankruptcy Act 1966

Item 1 - Subsection 5(1) (at the end of the definition of maintenance agreement)

274. Existing subsection 5(1) of the Bankruptcy Act defines 'maintenance agreement'. That definition provides that a maintenance agreement (for the purposes of the Bankruptcy Act) does not include a financial agreement or Part VIIIAB financial agreement within the meaning of the FLA.

275. Item 1 of Schedule 2 will add to existing subsection 5(1) to also ensure that the definition of 'maintenance agreement' does not include a financial agreement within the meaning of the Family Court Act 1997 (WA). This amendment ensures that the definition of maintenance agreement (for the purposes of the Bankruptcy Act) will treat financial agreements in the same way whether made under the FLA or the Family Court Act 1997 (WA).

Item 2 - Section 35B

276. Existing section 35B of the Bankruptcy Act confers the concurrent bankruptcy and family law jurisdiction that the Family Court of Australia has under existing sections 35 and 35A on the Family Court of Western Australia. Existing section 35B also limits the conferral of that jurisdiction to concurrent bankruptcy and family law jurisdiction where a bankrupt is a party to a marriage. It does this through existing subsection 35B(1), which excludes the application of existing subsection 35(1A) to the Family Court of Western Australia where a bankrupt is party to a de facto relationship. It also does this through existing subsection 35B(1A), which excludes the application of existing section 35A to the Family Court of Western Australia in relation to a de facto financial cause.

277. Item 2 of Schedule 2 will repeal existing section 35B and instead substitute a new section 35B. New section 35B is intended to set out the jurisdiction in bankruptcy of the Family Court of Western Australia. It is intended to ensure that jurisdiction is conferred in circumstances where a bankrupt is a party to a marriage or where a bankrupt is party to a de facto relationship.

Bankruptcy courts

278. Proposed subsection 35B(1) provides that section 27 of the Bankruptcy Act will apply to the Family Court of Western Australia in the corresponding way to which section 27 applies to the Family Court of Australia.

279. The effect of proposed subsection 35B(1) will be to permit the Family Court of Western Australia to exercise jurisdiction in bankruptcy that corresponds with the jurisdiction in bankruptcy exercised by the Family Court of Australia under existing sections 35 and 35A of the Bankruptcy Act.

280. Existing section 27 of the Bankruptcy Act provides for the exclusive jurisdiction of the Federal Court and the Federal Circuit Court in bankruptcy. Pursuant to paragraph 27(1)(b) of the Bankruptcy Act, the jurisdiction in bankruptcy of the Federal Court and the Federal Circuit Court is not exclusive of the jurisdiction of the Family Court of Australia under sections 35 and 35A of the Bankruptcy Act.

Jurisdiction in bankruptcy - bankrupt is a party to a marriage

281. Proposed subsection 35B(2) provides that existing subsection 35(1) of the Bankruptcy Act (and existing subsection 35(3) (which defines 'property settlement proceedings' and 'spousal maintenance proceedings') so far as it relates to existing subsection 35(1)) applies to the Family Court of Western Australia in a corresponding way in which it applies to the Family Court of Australia.

282. Proposed subsection 35B(2) will mirror the existing jurisdiction of the Family Court of Western Australia in relation to concurrent bankruptcy and family law proceedings under the FLA where a bankrupt is a party to a marriage. It therefore maintains the jurisdiction that is currently exercised pursuant to existing subsections 35B(1) and 35(1).

283. Existing subsection 35(1) provides that the Family Court has jurisdiction in bankruptcy in relation to any matter connected with, or arising out of, the bankruptcy of the bankrupt where a party to a marriage is a bankrupt, and the trustee of the bankrupt's estate is:

•

a party to property settlement proceedings in relation to either or both of the parties to the marriage, or

•

an applicant under section 79A of the FLA for the variation or setting aside of an order made under section 79 of that Act in property settlement proceedings in relation to either or both of the parties to the marriage, or

•

an applicant for an order under subsection 90K(1) or (3) of the FLA 1975 in relation to the setting aside of a financial agreement of the parties to the marriage; or

•

a party to spousal maintenance proceedings in relation to the maintenance of a party to the marriage.

284. The effect of proposed subsection 35B(2) will be to allow the Family Court of Western Australia to exercise jurisdiction in bankruptcy in relation to any matter connected with, or arising out of, the bankruptcy, if a party to a marriage is bankrupt and the bankruptcy trustee is an applicant for certain property orders or a party in property settlement or maintenance proceedings under the FLA.

285. Proposed subsection 35B(3) provides that appeals lie to the Family Court of Australia from a judgment of the Family Court of Western Australia exercising jurisdiction in bankruptcy under existing subsection 35(1), as applied by proposed subsection 35B(2).

286. Proposed subsection 35B(3) will mirror the existing appeal pathway for concurrent bankruptcy and family law proceedings determined by the Family Court of Western Australia where a bankrupt is party to a marriage. It therefore maintains the appeal pathway that is currently followed for matters decided by the Family Court of Western Australia when exercising jurisdiction under existing subsections 35B(1) and 35(1).

Jurisdiction in bankruptcy - bankrupt is a party to a de facto relationship

287. Proposed subsection 35B(4) provides that the Family Court of Western Australia has jurisdiction in bankruptcy in relation to any matter connected with, or arising out of, the bankruptcy of the bankrupt where a party to a de facto relationship is a bankrupt and the trustee of the bankrupt's estate is:

•

a party to property settlement proceedings under Part 5A of the Family Court Act 1997 (WA) or Part VIIIC of the FLA, in relation to either or both of the parties of the de facto relationship, or

•

an applicant under section 205ZH of the Family Court Act 1997 (WA) for the variation or setting aside of an order made under section 205ZG of that Act in property settlement proceedings in relation to either or both of the parties of the de facto relationship, or

•

an applicant section 90YZE of the FLA for the setting aside of an order made under section 90YX of that Act in proceedings between the parties to the de facto relationship with respect to a superannuation interest of either or both of the parties to the de facto relationship; or

•

an applicant for an order under subsection 205ZV(1) or (3) of the Family Court Act 1997 (WA) in relation to the setting aside of a financial agreement (within the meaning of Part 5A of that Act) of the parties to the de facto relationship.

288. Proposed subsection 35B(4) will mirror for the Family Court of Western Australia the application of existing subsection 35(1A). Existing subsection 35(1A) provides that the Family Court has jurisdiction in bankruptcy in relation to any matter connected with, or arising out of, the bankruptcy of the bankrupt where a party to a de facto relationship is bankrupt, and the trustee of the bankrupt's estate is a party or applicant in certain property settlement or spousal maintenance proceedings.

289. The proceedings outlined in proposed subparagraphs 35B(4)(b)(i) to (iv) mirror existing subparagraphs 35(1A)(b)(i) to (iv) with existing references to sections in the FLA replaced by references to the equivalent provisions under the Family Court Act 1997 (WA) and Part VIIIC for Western Australian de facto couples.

290. Proposed subsection 35B(5) mirrors existing subsection 35(4) and provides that an expression used in proposed subsection 35B(4) that is also used in the FLA has the same meaning in that subsection as it has in the FLA.

291. Proposed subsection 35B(6) provides that appeals from decisions made by the Family Court of Western Australia exercising jurisdiction under proposed subsection 35B(4) lie to the Court of Appeal of the Supreme Court of Western Australia and do not otherwise lie.

292. Although proposed subsection 35B(4) mirrors existing subsection 35(1A), it is not appropriate for appeals in relation to decisions made by the Family Court of Western Australia when exercising jurisdiction under proposed subsection 35B(4) to lie to the Full Court of the Family Court as they do for existing subsection 35(1A). This is because any orders made in relation to property vested in the trustee of the bankrupt's estate will be made in the context of an overall settlement with respect to the property of de facto couples. In Western Australia, that settlement will be made under the Family Court Act 1997 (WA), not the FLA. Proposed subsection 35B(6) is therefore intended to reflect the existing appeal pathway for decisions made under the Family Court Act 1997 (WA).

293. Proposed subsection 35B(7) invests the Court of Appeal of the Supreme Court of Western Australia with federal jurisdiction with respect to matters for which appeals are instituted under proposed subsection 35B(6).

Transfer of proceedings

294. Proposed subsection 35B(8) provides that the Federal Court may, on the application of a party to the proceeding or of its own motion, transfer a bankruptcy proceeding to the Family Court of Western Australia to be heard concurrently with family law proceedings involving a married or de facto couple.

295. Proposed subsection 35B(8) will mirror existing subsection 35A(1) which permits the Federal Court to transfer bankruptcy proceedings to the Family Court of Australia.

296. Proposed subsection 35B(9) provides that the Federal Circuit Court may, on the application of a party to the proceeding or of its own initiative, transfer a bankruptcy proceeding to the Family Court of Western Australia to be heard concurrently with family law proceedings involving a married or de facto couple.

297. Proposed subsection 35B(9) will mirror subsection 35A(2A) which permits the Federal Circuit Court to transfer bankruptcy proceedings to the Family Court of Australia.

298. Proposed subsection 35B(10) will mirror existing subsection 35A(3) which provides for the Family Court of Australia to exercise jurisdiction in bankruptcy in relation to matters transferred from the Federal Court or Federal Circuit Court.

299. Proposed subsection 35B(10) provides that, where a bankruptcy proceeding is transferred to the Family Court of Western Australia (under proposed subsections 35B(8) and (9)), the Family Court of Western Australia has jurisdiction in bankruptcy to hear and determine the bankruptcy proceeding (proposed subparagraph 35B(10)(a) and (b)) concurrently with the family law proceeding. This includes the power to grant remedies, make orders and issue, and direct the issue of, writs of such kinds that the Federal Court could have granted, made or issued in the bankruptcy proceeding (proposed subparagraph 35B(10)(c)). Remedies, orders and writs granted, made or issued by the Family Court of Western Australia will have effect, and may be enforced by the Family Court of Western Australia, as if they had been granted, made or issued by the Federal Court (proposed subparagraph 35B(10)(d)).

300. Proposed subsection 35B(10) therefore extends the existing jurisdiction of the Family Court of Western Australia to provide for the exercise of jurisdiction in bankruptcy when bankruptcy proceedings are transferred to be heard concurrently with proceedings involving a de facto financial cause under the Family Court Act 1997 (WA). Currently, the Family Court of Western Australia's jurisdiction in bankruptcy for transferred bankruptcy proceedings is limited by existing subsection 35B(1A), which excludes the application of existing section 35A to the Family Court of Western Australia in relation to a de facto financial cause.

301. Proposed paragraph 35B(10)(e) provides that appeals lie from judgments of the Family Court of Western Australia given in and in relation to a proceeding transferred under proposed subsection 35B(8) or (9) as if the judgments were judgments of the Federal Court constituted by a single Judge and do not otherwise lie. Appeals in relation to transferred bankruptcy proceedings will therefore lie to the Full Court of the Federal Court.

302. Proposed paragraph 35B(10)(e) will mirror existing paragraph 35A(3)(e). Existing paragraph 35A(3)(e) provides that appeals from judgments of the Family Court of Australia given in and in relation to transferred bankruptcy proceedings lie to the Full Court of the Federal Court. It is intended that the appellate pathway for transferred proceedings under proposed subsection 35B(10) will be consistent with the existing pathway in other jurisdictions.

303. Proposed paragraph 35B(10)(f) mirrors existing paragraph 35A(3)(f). It is intended to ensure that references in the Federal Court Act and the Bankruptcy Act (and other Commonwealth laws) include a reference to the corresponding term for the Family Court of Western Australia. In particular, a reference to:

•

the Federal Court (other than in the expression 'the Court or a Judge') will include a reference to the Family Court of Western Australia

•

a Judge of the Federal Court (other than in the expression 'the Court or a Judge') will include a reference to a judge of the Family Court of Western Australia

•

the expression 'the Court or a Judge' when used in relation to the Federal Court will include a reference to a judge of the Family Court of Western Australia sitting in Chambers, and

•

a Registrar will include a reference to a registrar of the Family Court of Western Australia.

304. Proposed subsection 35B(11) provides that where difficulty arises in the application of proposed paragraphs 35B(10)(c), (d) or (f) or in relation to a particular proceeding, the Family Court of Western Australia may, on the application of a party or of its own motion, give such directions or make such orders as it considers appropriate to resolve the difficulty. Proposed paragraphs 35B(10)(c), (d) and (f) provide for the enforcement of remedies, orders and writs, the institution of appeals and the application of other laws of the Commonwealth respectively.

305. Proposed subsection 35B(11) mirrors existing subsection 35A(4) which provides for the Family Court of Australia to resolve difficulties in relation to transferred proceedings in a corresponding way.

306. Proposed subsection 35B(12) provides that an appeal does not lie from a decision of the Federal Court or the Federal Circuit Court to transfer a proceeding under proposed subsections 35B(8) or (9) to the Family Court of Western Australia.

307. Proposed subsection 35B(12) mirrors existing subsection 35A(5) which provides that an appeal does not lie from a decision to transfer bankruptcy proceedings to the Family Court of Australia.

Item 3 - At the end of subparagraph 40(1)(o)(ii)

308. Item 3 will make a minor editorial amendment by adding 'or' to the end of subparagraph 40(1)(o)(ii) of the Bankruptcy Act. This will allow for the inclusion of proposed subparagraph 40(1)(o)(iii) in existing subsection 40(1) of the Bankruptcy Act.

309. Existing subsection 40(1) of the Bankruptcy Act lists the cases in which a debtor commits an act of bankruptcy. Existing paragraph 40(1)(o) provides that a debtor commits an act of bankruptcy when he or she becomes insolvent as a result of one or more transfers of property pursuant to a financial agreement within the meaning of the FLA (subparagraph 40(1)(o)(i)) or to a Part VIIIAB financial agreement of the FLA (subparagraph 40(1)(o)(ii)) to which the debtor is a party.

Item 4 - After subparagraph 40(1)(o)(ii)

310. Item 4 inserts proposed subparagraph 40(1)(o)(iii). It provides that a debtor will commit an act of bankruptcy when he or she becomes insolvent as a result of one or more transfers of property in accordance with a Part 5A financial agreement (within the meaning of the Family Court Act 1997 (WA).

311. Proposed subparagraph 40(1)(o)(iii) is intended to mirror existing subparagraphs 40(1)(o)(i) and (ii), which deal with acts of bankruptcy as a result of transfers pursuant to financial agreements and Part VIIIAB financial agreements within the meaning of the FLA. This will ensure that Western Australian financial agreements are treated in a corresponding way to equivalent agreements made under the FLA.

312. Subsection 115(1) of the Bankruptcy Act provides that the bankruptcy of a person shall relate back to, and be deemed to have commenced at, the time of the commission of the earliest act of bankruptcy within a period of six months before the presentation of the petition leading to the person's bankruptcy.

Item 5 - At the end of subsection 40(3)

313. Item 5 will make minor editorial amendments to subsection 40(3) by adding 'and' to the end of paragraphs 40(3)(a), (b) and (d).

Item 6 - Section 59A

314. Item 6 inserts an additional paragraph 40(3)(g) at the end of subsection 40(3). Existing subsection 40(3) contains deeming provisions relevant to paragraph 40(1)(g). Existing paragraph 40(1)(g) provides that it is an act of bankruptcy if a creditor, who has obtained a final judgment or final order, serves a bankruptcy notice on the debtor and the debtor does not comply with the requirements of the notice.

315. Proposed paragraph 40(3)(g) provides that an order made under the Family Court Act 1997 (WA) requiring the payment of arrears of maintenance will be deemed to be a final order for the purposes of paragraph 40(1)(g). It will apply in relation to orders made after the commencement of proposed paragraph 40(3)(g).

316. The effect of this item is to mirror the effect of existing paragraph 40(3)(f), which deals with orders for the payment of arrears of maintenance under the FLA. This item is intended to ensure that orders under the Family Court Act 1997 (WA) are treated in a corresponding way to equivalent orders under the FLA.

Item 7 - Subparagraphs 116(2)(d)(iva) and (vii)

317. Item 7 will repeal existing section 59A of the Bankruptcy Act and replace it with proposed section 59A. Existing section 59A provides that sections 58 and 59 of the Bankruptcy Act (which deal with the vesting of property upon bankruptcy, or upon a second or subsequent bankruptcy) have effect subject to an order under Part VIII or VIIIAB of the FLA.

318. Proposed section 59A provides that sections 58 and 59 of the Bankruptcy Act will have effect subject to an order under Part VIII, VIIIAB or VIIIC of the FLA, or an order under Part 5A of the Family Court Act 1997 (WA).

319. This item is intended to ensure that an order relating to family law property under the Family Court Act 1997 (WA) or a superannuation splitting order under Part VIIIC that applies specifically to Western Australian de facto couples will be treated in a corresponding way to the equivalent property and superannuation splitting orders for other couples under the FLA.

Item 8 - Paragraph 116(2)(r)

320. Existing subparagraphs 116(2)(d)(iva) and (vii) of the Bankruptcy Act provide that, subject to provisions permitting clawback of superannuation contributions made to defeat creditors (existing sections 128B, 128C and 139ZU of the Bankruptcy Act), payments to a bankrupt under a payment split under Part VIIIB of the FLA are not property that is divisible amongst creditors of the bankrupt.

321. Item 8 inserts a reference to 'or VIIIC' after 'VIIIB' in subparagraphs 116(2)(d)(iva) and (vii) of the Bankruptcy Act. This amendment provides that a payment to a bankrupt under a payment split under Part VIIIC of the FLA will not be property that is divisible amongst creditors of the bankrupt.

322. Item 8 is intended to ensure that the Bankruptcy Act will apply to the superannuation splitting provisions that relate to Western Australian de facto relationships in Part VIIIC in the same way as it applies to the superannuation splitting provisions for other couples under Part VIIIB of the FLA.

Item 9 - After paragraph 116(2)(r)

323. Existing paragraph 116(2)(r) provides that any property that a bankruptcy trustee is required to transfer to a former de facto partner of the bankrupt, pursuant to an order under Part VIIIAB (financial matters relating to de facto relationships) of the FLA, is not property that can be divisible amongst creditors of the bankrupt.

324. Item 9 inserts a reference to 'or VIIIC' after 'VIIIAB' in paragraph 116(2)(r) of the Bankruptcy Act. This amendment provides that property that a bankruptcy trustee is required to transfer to a former de facto partner of the bankrupt pursuant to an order under Part VIIIC of the FLA will not be property that is divisible amongst creditors of the bankrupt.

325. Item 9 is intended to ensure that the Bankruptcy Act will apply to the superannuation splitting orders that relate to Western Australian de facto relationships in Part VIIIC in the same way as orders regarding the property and financial matters of other de facto couples under the FLA.

Item 10 - At the end of paragraphs 120(5)(f) and 121(6)(f)

326. Item 10 inserts proposed paragraph 116(2)(ra) to provide that any property that the bankruptcy trustee is required to transfer to a former de facto partner of the bankrupt, pursuant to an order under Part 5A of the Family Court Act 1997 (WA), is not property that is divisible amongst creditors of the bankrupt.

327. Item 10 is intended to mirror existing paragraph 116(2)(r) which deals with property transferred pursuant to an order under Part VIIIAB under the FLA. This will ensure that orders relating to family law property made under the Family Court Act 1997 (WA) will be treated in a corresponding way to equivalent property orders that relate to other couples under the FLA.

Item 11 - Section 128N (definition of family law payment split )

328. Item 11 inserts a reference to the Family Court Act 1997 (WA) to the end of existing paragraphs 120(5)(f) and 121(6)(f) of the Bankruptcy Act.

329. Existing paragraph 120(5)(f) provides that the transferee granting the transferor a right to live at the transferred property (where the transferee is a former de facto partner of the transferor) has no value as consideration when determining whether a transfer of property is void for the purposes of subsections 120(1) and (4) of the Bankruptcy Act, unless the grant relates to a transfer or settlement of property, or agreement, under the FLA. Existing section 120 relates to a transfer of property that is void against the trustee for being an undervalued transaction.

330. Similarly, existing paragraph 121(6)(f) provides that the transferee granting the transferor a right to live at the transferred property (where the transferee is a former de facto partner of the transferor) has no value as consideration when determining whether a transfer of property is void for the purposes of subsections 121(4) and (5) of the Bankruptcy Act, unless the grant relates to a transfer or settlement of property, or agreement, under the FLA. Existing section 121 relates to a transfer of property that is void against the trustee where it was made to defeat creditors.

331. Item 11 is intended to ensure that a transfer or settlement of property made under the Family Court Act 1997 (WA) is treated in a corresponding way to a transfer or settlement of property made under the FLA when determining whether a transfer of property was void against the trustee of the bankrupt's estate.

Item 12 - At the end of subsection 140(11)

332. Existing section 128N provides definitions for the purposes of Subdivision B (Superannuation contributions) of Division 3 (Property available for payment of debts) in Part VI (Administration of property) of the Bankruptcy Act.

333. Item 12 inserts a reference to 'or VIIIC' after 'VIIIB' in the definition of 'family law payment split' in section 128N of the Bankruptcy Act.

334. Item 12 is intended to amend the definition of 'family law payment split' so that it includes payment splits made under Part VIIIC of the FLA. The effect of this item is to ensure that the Bankruptcy Act will apply to the superannuation splitting provisions that relate to Western Australian de facto couples in Part VIIIC in the same way as the superannuation splitting provisions for other couples under Part VIIIB of the FLA.

Item 13 - At the end of subsection 140(11)

335. Existing section 140 of the Bankruptcy Act relates to the declaration and distribution of dividends of the estate of a bankrupt amongst the bankrupt's creditors.

336. Item 13 will amend subsection 140(11) to provide that the requirement for a bankruptcy trustee to declare and distribute dividends amongst creditors has effect subject to an interlocutory injunction made under section 205ZI (general powers of court) or 235A (injunctions relating to de facto relationships) of the Family Court Act 1997 (WA).

337. Item 13 is intended to ensure that an interlocutory injunction under section 205ZI or 235A of the Family Court Act 1997 (WA) is treated by the Bankruptcy Act in a corresponding way to the equivalent interlocutory injunction made under section 90SS (general powers of court) or 114 (injunctions) of the FLA.

Item 14 - Subsections 161(3) and (4)

338. Item 14 inserts a reference to the 'Family Court Act 1997 (WA)' in subsections 161(3) and (4) of the Bankruptcy Act after the reference to the 'Family Law Act 1975'.

339. Existing subsections 161(3) and (4) apply to proceedings under the FLA where a trustee who is party to those proceedings ceases to be the trustee and is replaced by another person.

340. Existing subsection 161(3) provides that section 161 of the Bankruptcy Act (dealing with the circumstances where a trustee may act in the official name of trustee) applies to proceedings under the FLA in a corresponding way to the way it applies to a suit. Item 14 is intended to ensure that section 161 will also apply to proceedings under the Family Court Act 1997 (WA).

341. Existing subsection 161(4) provides that where a trustee (the first trustee) who is a party to proceedings under the FLA ceases to be the trustee of the bankrupt's estate and another person becomes the first trustee's successor in office (the second trustee), the second trustee will be substituted for the first trustee in the relevant proceedings. This subsection ensures that proceedings are not interrupted where there is a change of trustee. Item 14 is intended to ensure that subsection 161(4) will also apply to a trustee who is party to proceedings pending under the Family Court Act 1997 (WA).

342. The effect of this item is to ensure that section 161 of the Bankruptcy Act applies to bankruptcy trustees involved in proceedings under the Family Court Act 1997 (WA) in a corresponding way to which section 161 applies to bankruptcy trustees involved in proceedings under the FLA.

Schedule 3 - Consequential amendments

343. This Part provides for consequential amendments to 21 Commonwealth Acts, to support the implementation of superannuation splitting for separating de facto couples in Western Australia. The Acts amended by this Part are the:

•

Australian Defence Force Cover Act 2015

•

Australian Defence Force Superannuation Act 2015

•

Defence Force Retirement and Death Benefits Act 1973

•

Defence Forces Retirement Benefits Act 1948

•

Governor-General Act 1974

•

Income Tax Assessment Act 1997

•

Judges' Pensions Act 1968

•

Military Superannuation and Benefits Act 1991

•

Parliamentary Contributory Superannuation Act 1948

•

Proceeds of Crime Act 2002

•

Small Superannuation Accounts Act 1995

•

Social Security Act 1991

•

Superannuation Act 1922

•

Superannuation Act 1976

•

Superannuation Act 1990

•

Superannuation Act 2005

•

Superannuation Contributions Tax (Assessment and Collection) Act 1997

•

Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997

•

Superannuation Industry (Supervision) Act 1993

•

Superannuation (Unclaimed Money and Lost Members) Act 1999

•

Veterans' Entitlements Act 1986

344. An explanation of the amendments to be made to these Acts is set out below.

Australian Defence Force Cover Act 2015

Items 1 to 5 - Section 4 (definitions)

345. The Australian Defence Force Cover Act 2015 (ADF Cover Act) currently provides that the terms 'member spouse', 'non-member spouse', 'splitting agreement', 'splitting order' and 'superannuation interest' have the same meaning as in Part VIIIB of the FLA. The amendments in this Bill will amend the ADF Cover Act to extend those definitions so that they refer to the relevant terms in 'Part VIIIB or VIIIC' of the FLA. In this way, the meaning of the terms used in relation to superannuation splitting for de facto couples in Western Australia under Part VIIIC are also taken into consideration when interpreting relevant provisions in the ADF Cover Act.

Item 6 - Section 64 (paragraph beginning "Benefits")

346. Section 64 of the ADF Cover Act provides a simplified outline (that is, a high level summary of the contents) of Part 6 of the ADF Cover Act. The simplified outline indicates that Part 6 deals with 'benefits that may be split or withheld under Part VIIIB of the FLA'. The proposed amendment to this outline would insert the words 'or Part VIIIC', to make clear that the superannuation splitting provisions for de facto couples in Western Australia contained in Part VIIIC are also dealt with under Part 6 of the ADF Cover Act.

Item 7 - Subsection 65(1)

347. Subsection 65(1) of the ADF Cover Act currently provides that the Act has effect subject to Part VIIIB of the FLA (Part VIIIB of the FLA provides for splitting of superannuation interests of married couples and of de facto couples in participating jurisdictions). This item of the Bill would amend subsection 65(1) to clarify that the ADF Cover Act has effect subject to Part VIIIB and Part VIIIC of the FLA. In this way, the superannuation splitting provisions in Part VIIIC that apply specifically to Western Australia de facto couples will apply to the ADF Cover Act in the same way that the superannuation splitting provisions for other couples under Part VIIIB apply.

Australian Defence Force Superannuation Act 2015

Item 8 - Subsection 9(2) (definitions)

348. The Australian Defence Force Superannuation Act 2015 (ADF Superannuation Act) currently provides that the terms 'member spouse', 'non-member spouse', 'splitting agreement', 'splitting order' and 'superannuation interest' have the same meaning as in Part VIIIB of the FLA. The amendments will amend subsection 9(2) of the ADF Superannuation Act to extend those definitions so that they refer to the relevant terms in 'Part VIIIB or VIIIC' of the FLA. In this way, the meaning of the terms used in relation to superannuation splitting for de facto couples in Western Australia under Part VIIIC are also taken into consideration when interpreting relevant provisions in the ADF Superannuation Act.

Defence Force Retirement and Death Benefits Act 1973

Item 9 - Section 49A (paragraph (b) of the definition of base amount )

349. The definition of 'base amount' in the Defence Force Retirement and Death Benefits Act 1973 (DFRDB Act) currently cross-references subsection 90XT(4) in Part VIIIB of the FLA (Part VIIIB provides for superannuation splitting and section 90XT is the provision providing the court with power to make superannuation splitting orders). The proposed amendment would insert an additional cross-reference to the equivalent provision to subsection 90XT(4) that is located in the new Part VIIIC, which is subsection 90YY(5). This will ensure the definition of 'base amount' used in the DFRDB Act includes the meanings in both Part VIIIB (which applies to married couples in Australia and to de facto couples in participating jurisdictions) and to Part VIIIC (which applies to de facto couples in Western Australia).

Items 10 to 18 - Section 49A (definitions)

350. These amendments would extend the existing definitions of 'family law value', 'member spouse', 'non-member spouse', 'operative time', 'payment split', 'splitting agreement', 'splitting order', 'splitting percentage' and 'superannuation interest' used in the DFRDB Act so that, where the DFRDB Act applies a definition within the meaning of Part VIIIB of the Family Law Act (which deals with financial matters relating to de facto relationships), the DFRDB Act also applies the corresponding definition in proposed Part VIIIC of the Act. In this way, the meaning of the terms used in relation to superannuation splitting for de facto couples in Western Australia under Part VIIIC are also taken into consideration when interpreting relevant provisions in the DFRDB Act.

Defence Forces Retirement Benefits Act 1948

Item 19 - Section 80A (paragraph (b) of the definition of base amount )

351. The definition of 'base amount' in the Defence Force Retirement Benefits Act 1948 (DFRB Act) currently cross-references subsection 90XT(4) in Part VIIIB of the FLA (Part VIIIB provides for superannuation splitting and section 90XT is the provision providing the court with power to make superannuation splitting orders). The proposed amendment would insert an additional cross-reference to the equivalent provision to subsection 90XT(4) that is located in the new Part VIIIC, which is subsection 90YY(5). This will ensure the definition of 'base amount' used in the DFRB Act includes the meanings in both Part VIIIB (which applies to married couples in Australia and to de facto couples in participating jurisdictions) and to Part VIIIC (which applies to de facto couples in Western Australia).

Items 20 to 28 - Section 80A (definitions)

352. These amendments would extend the existing definitions of 'family law value', 'member spouse', 'non-member spouse', 'operative time', 'payment split', 'splitting agreement', 'splitting order', 'splitting percentage' and 'superannuation interest' used in the DFRB Act so that, where the DFRB Act applies definitions within the meaning of Part VIIIB of the FLA (which provides for splitting of superannuation interests of married couples and of de facto couples in participating jurisdictions), the DFRB Act also applies the corresponding definition in proposed Part VIIIC of the Act. In this way, the meaning of the terms used in relation to superannuation splitting for de facto couples in Western Australia under Part VIIIC are also taken into consideration when interpreting relevant provisions in the DFRB Act.

Governor-General Act 1974

Item 29 - Subsection 2A(2) (paragraph (b) of the definition of base amount )

353. The definition of 'base amount' in the Governor-General Act 1974 (GG Act) currently cross-references subsection 90XT(4) in Part VIIIB of the FLA (Part VIIIB provides for superannuation splitting and section 90XT is the provision providing the court with power to make superannuation splitting orders). The proposed amendment would insert an additional cross-reference to the equivalent provision to subsection 90XT(4) that is located in the new Part VIIIC, which is subsection 90YY(5). This will ensure the definition of 'base amount' used in the GG Act includes the meanings in both Part VIIIB (which applies to married couples in Australia and to de facto couples in participating jurisdictions) and to Part VIIIC (which applies to de facto couples in Western Australia).

Items 30 to 38 - Subsection 2A(2) (definitions)

354. These amendments would extend the existing definitions of 'family law value', 'member spouse', 'non-member spouse', 'operative time', 'payment split', 'splitting agreement', 'splitting order', 'splitting percentage' and 'superannuation interest' used in the GG Act so that, where the GG Act applies definitions within the meaning of Part VIIIB of the Family Law Act (which deals with financial matters relating to de facto relationships), the GG Act also applies the corresponding definition in proposed Part VIIIC of the Act. In this way, the meaning of the terms used in relation to superannuation splitting for de facto couples in Western Australia under Part VIIIC are also taken into consideration when interpreting relevant provisions in the GG Act.

Income Tax Assessment Act 1997

Item 39 - Paragraph 118-313(a)

355. Section 118-313 of the Income Tax Assessment Act 1997 (ITAA) provides that a capital gain or loss made from certain capital gains tax events directly related to superannuation agreements under the FLA ought to be disregarded. The proposed amendment would ensure that a capital gain or loss made from a capital gains tax event directly related to a Part VIIIC superannuation agreement made between Western Australian de facto couples would also be disregarded, in the same way as a Part VIIIAB financial agreement (which may include a superannuation agreement under Part VIIIB of the FLA).

Item 40 - Paragraph 126-140(1)(b)

356. Section 126-140 of the ITAA provides for when there is a roll-over for Capital Gains Tax purposes in circumstances involving small superannuation funds. One set of circumstances covered involves those where a trustee transfers a Capital Gains Tax asset to the trustee of another superannuation fund as a result of a waiver notice being served under section 90XZA in Part VIIIB of the FLA. Section 90XZA of the FLA provides for a non-member spouse to waive their rights under a payment split on a superannuation interest.

357. The proposed amendment would insert an additional cross-reference to the equivalent provision to section 90XZA that is located in the new Part VIIIC, which is section 90YZQ. This will ensure that Western Australian de facto couples who serve a waiver notice on the trustee are treated in the same manner in relation to roll-overs for Capital Gains Tax purposes, as de facto couples in participating jurisdictions.

Item 41 - Paragraph 126-140(2B)(b)

358. Subsection 126-140(2A) of the ITAA provides for the circumstances in which there is a transfer of an individual's interest in a small superannuation fund. One of those circumstances involves a transfer in accordance with an award, order or agreement mentioned in subsection 126-140(2B). Subsection 126-140(2B)(b) provides that one such example of the award or orders is a court order made under section 79, subsection 90AE(2) or 90AF(2) or section 90SM of the FLA. The proposed amendment would insert a reference to subsection 90YX in the new Part VIIIC, which provides that the Family Court of Western Australia or the Magistrates Court of Western Australia may make orders in relation to the superannuation interest. This will ensure the orders of a court in relation to the superannuation interests of Western Australian de facto couples made under the new Part VIIIC, are taken into account in the same manner as those made under Part VIIIB in relation to de facto couples from participating jurisdictions, for the purposes of transferring interests in a small superannuation fund.

Item 42 - Paragraph 294-90(4)(a)

359. Section 294-90 of the ITAA deals with the circumstances in which a transfer balance debit arises as a result of a superannuation payment split. Paragraph 294-90(4)(a) provides that the time at which the debit arises is linked to the 'operative time' for a payment split within the meaning of Part VIIIB of the FLA. The proposed amendment would insert a reference to Part VIIIC, to make clear that a debit also arises under the same circumstances, and at the same operative time, in the case of Western Australian de facto couples who have entered into a Part VIIIC superannuation splitting agreement.

Item 43 - Subparagraph 307-5(7)(a)(i)

360. Subsection 307-5(7) of the ITAA prescribes the types of payments which are determined to be 'family law superannuation payments' for the purposes of the ITAA. Subparagraph 307-5(7)(a)(i) provides that a payment in accordance with Part VIIIB of the FLA is a family law superannuation payment for the purpose of this clause. The proposed amendment would extend this definition to include reference to Part VIIIC, to ensure that superannuation agreements between Western Australian de facto couples which are made under Part VIIIC of the FLA are also recognised as family law superannuation payments under the ITAA.

Items 44 to 47 - Subsection 995-1(1) (definitions)

361. These amendments would extend the existing definitions of 'member spouse', 'non-member spouse', 'payment split', and 'splittable payment' used in the ITAA so that, where the ITAA applies definitions within the meaning of Part VIIIB of the FLA (which provides for splitting of superannuation interests of married couples and of de facto couples in participating jurisdictions), the ITAA also applies the corresponding definition in the new Part VIIIC. In this way, the meaning of the terms used in relation to superannuation splitting for de facto couples in Western Australia under Part VIIIC are also taken into consideration when interpreting relevant provisions in the ITAA.

Judges' Pensions Act 1968

Item 48 -Subsection 4(1) (paragraph (b) of the definition of base amount )

362. The definition of 'base amount' in the Judges' Pensions Act 1968 (JP Act) currently cross-references subsection 90XT(4) in Part VIIIB of the FLA (Part VIIIB provides for superannuation splitting and section 90XT is the provision providing the court with power to make superannuation splitting orders). The proposed amendment would insert an additional cross-reference to the equivalent provision to subsection 90XT(4) that is located in the new Part VIIIC, which is subsection 90YY(5). This will ensure the definition of 'base amount' used in the JP Act includes the meanings in both Part VIIIB (which applies to married couples in Australia and to de facto couples in participating jurisdictions) and to Part VIIIC (which applies to de facto couples in Western Australia).

Items 49 to 57 - Subsection 4(1) (definitions)

363. These amendments would extend the existing definitions of 'family law value', 'member spouse', 'non-member spouse', 'operative time', 'payment split', 'splitting agreement', 'splitting order', 'splitting percentage' and 'superannuation interest' used in the JP Act so that, where the JP Act applies definitions within the meaning of Part VIIIB of the FLA (which provides for splitting of superannuation interests of married couples and of de facto couples in participating jurisdictions), the JP Act also applies the corresponding definition in the new Part VIIIC of the FLA. In this way, the meaning of the terms used in relation to superannuation splitting for de facto couples in Western Australia under Part VIIIC are also taken into consideration when interpreting relevant provisions in the JP Act.

Military Superannuation and Benefits Act 1991

Item 58 - Subsection 5A(4) (definitions)

364. These amendments would extend the existing definitions of 'member spouse', 'non-member spouse', 'splitting agreement', 'splitting order', and 'superannuation interest' used in the Military Superannuation and Benefits Act 1991 (MSB Act) so that, where the MSB Act applies definitions within the meaning of Part VIIIB of the FLA (which provides for splitting of superannuation interests of married couples and of de facto couples in participating jurisdictions), the MSB Act also applies the corresponding definition in new Part VIIIC of the FLA. In this way, the meaning of the terms used in relation to superannuation splitting for de facto couples in Western Australia under Part VIIIC are also taken into consideration when interpreting relevant provisions in the MSB Act.

Parliamentary Contributory Superannuation Act 1948

Item 59 -Section 22CA (paragraph (b) of the definition of base amount )

365. The definition of 'base amount' in the Parliamentary Contributory Superannuation Act 1948 (PCS Act) currently cross-references subsection 90XT(4) in Part VIIIB of the FLA (Part VIIIB provides for superannuation splitting and section 90XT is the provision providing the court with power to make superannuation splitting orders). The proposed amendment would insert an additional cross-reference to the equivalent provision to subsection 90XT(4) that is located in the new Part VIIIC, which is subsection 90YY(5). This will ensure the definition of 'base amount' used in the PCS Act includes the meanings in both Part VIIIB (which applies to married couples in Australia and to de facto couples in participating jurisdictions) and to Part VIIIC (which applies to de facto couples in Western Australia).

Items 60 to 68 - Section 22CA (definitions)

366. These amendments would extend the existing definitions of 'family law value', 'member spouse', 'non-member spouse', 'operative time', 'payment split', 'splitting agreement', 'splitting order', 'splitting percentage' and 'superannuation interest' used in the PCS Act so that, where the PCS Act applies definitions within the meaning of Part VIIIB of the FLA (which provides for splitting of superannuation interests of married couples and of de facto couples in participating jurisdictions), the PCS Act also applies the corresponding definition in new Part VIIIC of the FLA. In this way, the meaning of the terms used in relation to superannuation splitting for de facto couples in Western Australia under Part VIIIC are also taken into consideration when interpreting relevant provisions in the PCS Act.

Proceeds of Crime Act 2002

Item 69 - At the end of subparagraph 330(4)(ba)(ii)

367. Subsection 330(4) of the Proceeds of Crime Act 2002 (POCA Act) sets out when property ceases to be proceeds of an offence or an instrument of an offence. Subparagraph 330(4)(ba)(ii) of the POCA Act provides that property ceases to be proceeds of an offence or an instrument of an offence if the property has been distributed in accordance with a financial agreement, or Part VIIIAB financial agreement within the meaning of the FLA, and six years have elapsed since that distribution. The proposed amendment would insert an additional reference to superannuation agreements within the meaning of Part VIIIC of the FLA, and will provide that property that has been distributed in accordance with a Part VIIIC superannuation agreement will cease to be proceeds of an offence or an instrument of an offence if six years have elapsed since this distribution. In this way, Western Australian de facto couples who make a superannuation agreement under Part VIIIC receive the same protections as couples from participating jurisdictions.

Small Superannuation Accounts Act 1995

Item 70 - Subsection 15(7) (definitions)

368. These amendments would extend the existing definitions of 'member spouse', 'non-member spouse', and 'payment split' used in the Small Superannuation Accounts Act 1995 (SSA Act) so that, where the SSA Act applies definitions within the meaning of Part VIIIB of the FLA (which provides for splitting of superannuation interests of married couples and of de facto couples in participating jurisdictions), SSA Act also applies the corresponding definition in new Part VIIIC of the FLA. In this way, the meaning of the terms used in relation to superannuation splitting for de facto couples in Western Australia under Part VIIIC are also taken into consideration when interpreting relevant provisions in SSA Act.

Social Security Act 1991

Item 71 - Subparagraphs 9A(2)(h)(iva), 9B(2)(h)(iva), 9BA(2)(f)(vi) and 9C(b)(i)

369. Sections 9A, 9B and 9BA of the Social Security Act 1991 set out the meaning of an asset-test exempt income stream, particularly for lifetime income streams (section 9A), life expectancy income streams (section 9B), and market-linked income streams (section 9BA). Subsections 9A(2), 9B(2) and 9BA(2) set out the requirements of a contract/governing rules for provision of those particular income streams. One of these contract requirements, as set out in subparagraphs 9A(2)(h)(iva), 9B(2)(h)(iva), 9BA(2)(f)(vi) respectively is that the income stream cannot be commuted except to the extent necessary to give effect to an entitlement under a Part VIIIB payment split under the FLA. The proposed amendments would insert additional references to Part VIIIC into each of those subparagraphs, to ensure that the relevant income streams can similarly not be commuted except to the extent necessary to give effect to an entitlement under a Part VIIIC superannuation agreement made by Western Australian de facto couples. In this way, Western Australian de facto couples are treated in the same manner as de facto couples in participating jurisdictions for the purposes of determining asset-test exempt income streams.

370. Section 9C of the Social Security Act sets out the circumstances in which an income stream is determined to be a family law affected income stream. Subparagraph 9C(b)(i) provides that one of those circumstances includes that the member's partner or former partner becomes entitled to be paid some or all of the income stream under a payment split under Part VIIIB of the FLA. The proposed amendment would insert an additional reference to Part VIIIC, to ensure that a payment split under a Part VIIIC superannuation agreement made by Western Australian de facto couple is similarly taken into account in determining whether an income stream is a family law affected income stream.

Superannuation Act 1922

Item 72 -Section 93DA (paragraph (b) of the definition of base amount )

371. The definition of 'base amount' in the Superannuation Act 1992 currently cross-references subsection 90XT(4) in Part VIIIB of the FLA (Part VIIIB provides for superannuation splitting and section 90XT is the provision providing the court with power to make superannuation splitting orders). The proposed amendment would insert an additional cross-reference to the equivalent provision to subsection 90XT(4) that is located in the new Part VIIIC, which is subsection 90YY(5). This will ensure the definition of 'base amount' used in the Superannuation Act 1992 includes the meanings in both Part VIIIB (which applies to married couples in Australia and to de facto couples in participating jurisdictions) and to Part VIIIC (which applies to de facto couples in Western Australia).

Items 73 to 81 - Section 93DA (definitions)

372. These amendments would extend the existing definitions of 'family law value', 'member spouse', 'non-member spouse', 'operative time', 'payment split', 'splitting agreement', 'splitting order', 'splitting percentage' and 'superannuation interest' used in the Superannuation Act 1922 so that, where the Superannuation Act 1922 applies definitions within the meaning of Part VIIIB of the FLA (which provides for splitting of superannuation interests of married couples and of de facto couples in participating jurisdictions), the Superannuation Act 1922 also applies the corresponding definition in new Part VIIIC of the FLA. In this way, the meaning of the terms used in relation to superannuation splitting for de facto couples in Western Australia under Part VIIIC are also taken into consideration when interpreting relevant provisions in the Superannuation Act 1922.

Superannuation Act 1976

Item 82 - Section 146MA (paragraph (b) of the definition of base amount )

373. The definition of 'base amount' in the Superannuation Act 1976 currently cross-references subsection 90XT(4) in Part VIIIB of the FLA (Part VIIIB provides for superannuation splitting and section 90XT is the provision providing the court with power to make superannuation splitting orders). The proposed amendment would insert an additional cross-reference to the equivalent provision to subsection 90XT(4) that is located in the new Part VIIIC, which is subsection 90YY(5). This will ensure the definition of 'base amount' used in the Superannuation Act 1976 includes the meanings in both Part VIIIB (which applies to married couples in Australia and to de facto couples in participating jurisdictions) and to Part VIIIC (which applies to de facto couples in Western Australia).

Items 83 to 91 - Section 146MA (definitions)

374. These amendments would extend the existing definitions of 'family law value', 'member spouse', 'non-member spouse', 'operative time', 'payment split', 'splitting agreement', 'splitting order', 'splitting percentage' and 'superannuation interest' used in the Superannuation Act 1976 so that, where the Superannuation Act 1976 applies definitions within the meaning of Part VIIIB of the FLA (which provides for splitting of superannuation interests of married couples and of de facto couples in participating jurisdictions), the Superannuation Act 1976 also applies the corresponding definition in new Part VIIIC of the FLA. In this way, the meaning of the terms used in relation to superannuation splitting for de facto couples in Western Australia under Part VIIIC are also taken into consideration when interpreting relevant provisions in the Superannuation Act 1976.

Superannuation Act 1990

Item 92 - Subsection 5A(3) (definitions)

375. These amendments would extend the existing definitions of 'member spouse', 'non-member spouse', 'splitting agreement', 'splitting order', and 'superannuation interest' used in the Superannuation Act 1990 so that, where the Superannuation Act 1990 applies definitions within the meaning of Part VIIIB of the FLA (which provides for splitting of superannuation interests of married couples and of de facto couples in participating jurisdictions), the Superannuation Act 1990 also applies the corresponding definition in new Part VIIIC of the FLA. In this way, the meaning of the terms used in relation to superannuation splitting for de facto couples in Western Australia under Part VIIIC are also taken into consideration when interpreting relevant provisions in the Superannuation Act 1990.

Superannuation Act 2005

Item 93 - Subsection 12(2) (definitions)

376. These amendments would extend the existing definitions of 'member spouse', 'non-member spouse', 'splitting agreement', 'splitting order', 'superannuation interest' used in the Superannuation Act 2005 so that, where the Superannuation Act 2005 applies definitions within the meaning of Part VIIIB of the FLA (which provides for splitting of superannuation interests of married couples and of de facto couples in participating jurisdictions), the Superannuation Act 2005 also applies the corresponding definition in new Part VIIIC of the FLA. In this way, the meaning of the terms used in relation to superannuation splitting for de facto couples in Western Australia under Part VIIIC are also taken into consideration when interpreting relevant provisions in the Superannuation Act 2005.

Superannuation Contributions Tax (Assessment and Collection) Act 1997

Item 94 - Subsection 10A(2) (payment splits or interest splits on marriage breakdown)

377. Section 10A of the Superannuation Contributions Tax (Assessment and Collection) Act 1997 (SCTAC Act) deals with the circumstances in which a liability to pay a surcharge on payment splits applying to splittable payments, or interest splits, arises upon relationship breakdown. The proposed amendments would extend the existing definitions of 'non-member spouse', 'payment split', 'and 'splittable payment' used in section 10A to ensure that a liability to pay a surcharge on a payment split applying to a splittable payment under a Part VIIIC superannuation agreement, is imposed in the same way as it would be on a payment split or splittable payment under a Part VIIIAB financial agreement (which may include a superannuation agreement under Part VIIIB of the FLA). In that way, Western Australian de facto couples would be treated the same as de facto couples in other jurisdictions.

Item 95 - Subsection 16(11) (deferment of liability for surcharge payable by superannuation (unfunded benefits) providers)

378. Section 16 of the SCTAC Act makes provision for the deferment of the liability of a superannuation (unfunded defined benefits) provider to pay surcharge on the surchargeable contributions of a member of the relevant unfunded defined benefits superannuation scheme, and for interest to accrue on the deferred amount. The proposed amendments would extend the existing definitions of 'payment split', and 'splittable payment' used in subsection 16(11) to ensure that a payment split and splittable payment under a Part VIIIC superannuation agreement made between Western Australian de facto couples is treated in the same manner as those under a Part VIIIAB financial agreement (which may include a superannuation agreement under Part VIIIB of the FLA) in relation to de facto couples in other jurisdictions.

Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997

Item 96 - Subsection 12(8) (superannuation providers to give statements)

379. Section 12 of the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 (SCTMCPSFAC Act) deals with the obligations of superannuation providers to provide statements about members to the Commissioner in certain circumstances, including when a payment split applies to a splittable payment in respect of an interest that a person has as a member of the superannuation fund.

380. Currently under subsection 12(8) of the SCTMCPSFAC Act, 'payment split', and 'splittable payment' are given the meaning they have under Part VIIIB of the FLA. The proposed amendments would extend the existing definitions of 'payment split', and 'splittable payment' used in section 12(8) to ensure that superannuation providers are also obliged to provide statements to the Commissioner where a payment split applies to a splittable payment under a Part VIIIC superannuation agreement made between Western Australian de facto couples, as well as where a payment split applies to a splittable payment under Part VIIIAB financial agreement (which may include a superannuation agreement under Part VIIIB of the Family Law Act).

Item 97 - Subsection 15(11) (when surcharge will become payable)

381. Section 15 of the SCTMCPSFAC Act makes provision for the deferment of the liability of a member of a constitutionally protected superannuation fund to pay surcharge, and for interest to accrue on the deferred amount.

382. Currently under subsection 15(11) of the SCTMCPSFAC Act, 'payment split', and 'splittable payment' are given the meaning they have under Part VIIIB of the FLA. The proposed amendments would extend the existing definitions of 'payment split', and 'splittable payment' used in section 15 to ensure that a member's liability to pay a surcharge is determined in the same way regardless of whether a payment split applies to a splittable interest under a Part VIIIC superannuation agreement made by Western Australian de facto couples, or a Part VIIIAB financial agreement made by de facto couples in other jurisdictions (which may include a superannuation agreement under Part VIIIB).

Superannuation Industry (Supervision) Act 1993

Item 98 - Subparagraph 66(2B)(d)(ii)

383. Section 66 of the Superannuation Industry (Supervision) Act 1993 (SISA Act) prohibits a trustee or an investment manager from intentionally acquiring certain assets from members of regulated superannuation funds. Subsection 66(2B) carves out exceptions in certain circumstances where the assets in question represent a member's entitlements under Part VIIIB of the FLA, which refers to superannuation agreements. The proposed amendment would ensure that the same exception from this prohibition is carved out under the same circumstances for Western Australian de facto couples who are a party to Part VIIIC superannuation agreements, as de facto couples in other jurisdictions who are a party to a Part VIIIAB financial agreement (which may include a superannuation agreement under Part VIIIB). In this way, Western Australian de facto couples will be treated in the same manner as de facto couples in participating jurisdictions.

Item 99 - Subparagraph 71EA(1)(d)(ii)

384. Section 71EA of the SISA Act deals with transitional arrangements in relation to in-house assets. Subsection 71EA specifies that the section applies only in certain circumstances, one of which is whether the asset represents the whole, or part of the member's entitlements as determined under Part VIIIB of the FLA. The proposed amendment would insert a reference to Part VIIIC, to ensure that the section applies similarly if the asset in question represents the whole, or part of the member's entitlements as determined under a Part VIIIC superannuation agreement made between Western Australian de facto couples. In this way, Western Australian de facto couples will be treated in the same manner as de facto couples in participating jurisdictions.

Superannuation (Unclaimed Money and Lost Members) Act 1999

Items 100 to 102 - Section 8 (definitions)

385. These amendments would extend the existing definitions of 'non-member spouse', 'payment split', and 'splittable payment', used in the Superannuation (Unclaimed Money and Lost Members) Act 1999 (SUMLM Act) so that, where the SUMLM Act applies definitions within the meaning of Part VIIIB of the FLA (which provides for splitting of superannuation interests of married couples and of de facto couples in participating jurisdictions), the SUMLM Act also applies the corresponding definition in new Part VIIIC of the FLA. In this way, the meaning of the terms used in relation to superannuation splitting for de facto couples in Western Australia under Part VIIIC are also taken into consideration when interpreting relevant provisions in the SUMLM Act.

Items 103 to 104 - Paragraph 20F(4)(b) and following subsection 20F(4)

386. Section 20F of the SUMLM Act deals with the requirement for a superannuation provider to pay the Commissioner unclaimed superannuation, and sets out a method of calculating the value of that unclaimed superannuation. The proposed amendments would ensure that a Part VIIIC superannuation agreement made between Western Australian de facto couples is able to be taken into consideration when calculating unclaimed superannuation for the purposes of this clause, in the same way that a Part VIIIAB financial agreement (which may include a superannuation agreement under Part VIIIB of the Family Law Act) is taken into account in relation to de facto couples in other jurisdictions.

Items 105 to 107 - Paragraph 20QD(4)(a), including (note 1) and (after note 1)

387. Section 20QD deals with the requirement for a superannuation provider to pay the Commissioner certain amounts in respect of inactive low-balance accounts, and sets out a method for calculating the that amount.

388. Firstly, by replacing the references to subsection 90MB(3) of the FLA with the references to subsection 90XB(3), the proposed amendments update the SUMLM Act to ensure this reference is accurate following a renumbering of Part VIIIB of the FLA (as amended by the Civil Law and Justice Legislation Amendment Act 2018).

389. Secondly, by inserting cross-references to the proposed subsection 90YC(3) of the FLA, the proposed amendments would ensure that, in the same way that a payment split under a Part VIIIAB financial agreement ought to be taken into account in calculating the value that must be paid to the Commissioner for the purposes of this clause, a Part VIIIC agreement between Western Australian de facto couples also ought to be taken into account. In this way, Western Australian de facto couples will be treated in the same manner as de facto couples in participating jurisdictions.

Items 108 to 109 - Paragraph 24E(4)(a) and subsection 24E(4) (after note 1)

390. Section 24E deals with the requirement for a superannuation provider to pay the Commissioner certain amounts in respect of lost member accounts, and sets out a method for calculating that amount. By inserting cross-references to the proposed subsection 90YC(3) of the FLA, the proposed amendments would ensure that, in the same way that a payment split under a Part VIIIAB financial agreement ought to be taken into account in calculating the value that must be paid to the Commissioner for the purposes of this clause, a Part VIIIC agreement between Western Australian de facto couples also ought to be taken into account. In this way, Western Australian de facto couples will be treated in the same manner as de facto couples in participating jurisdictions.

Veterans' Entitlements Act 1986

Item 110 - Subparagraph 5JA(2)(h)(iva)

391. Section 5JA of the Veterans' Entitlements Act 1986 provides the meaning of asset-tested exempt income stream (specifically in relation to lifetime income streams). Subparagraph 5JA(2)(h)(iva) provides that one requirement of a contract for the provision of an income stream is that the income stream cannot be commuted except to give effect to an entitlement of a person's partner or former partner under a Part VIIIB payment split. The proposed amendment would ensure that the income streams could also be commuted to give effect to an entitlement of a person's partner or former partner under a Part VIIIC payment split. That way, Part VIIIC payment splits affecting Western Australian de facto couples would be treated in the same way as Part VIIIB payment splits.

Schedule 4 - Application and transitional provisions

Part 1 - Preliminary

Item 1 - Definitions

392. This item provides definitions for terms used in Schedule 4 of the Bill. The term 'commencement' is defined to mean the commencement of Schedule 4 (as opposed to the commencement of other clauses of, or schedules to, the Bill). The term 'new Family Law Act' is defined to mean the Family Law Act 1975, after it has been amended by Schedule 1 of the Bill.

Part 2 - Amendments to the Family Law Act 1975

Item 2 - Superannuation agreements

393. Item 2 will clarify that section 90YK, which provides for the inclusion of a superannuation agreement made under Part VIIIC within a financial agreement made under Part 5A of the Family Court Act 1997 (WA) (such agreements are defined in section 90YD as being Western Australian financial agreements), will apply to Western Australian financial agreements made after the commencement of Schedule 1 of the Bill.

394. This means that superannuation agreements made under Part VIIIC cannot form part of a financial agreement that was made by Western Australian de facto couples prior to the commencement of Part VIIIC, under Part 5A of the Family Court Act 1997 (WA).

395. De facto couples in Western Australia who have made a financial agreement under Part 5A prior to the commencement of Part VIIIC of the Family Law Act would need to terminate that prior agreement and make a new Western Australian financial agreement after commencement of Part VIIIC, if they wished to include a superannuation splitting agreement as part of their financial agreement. In practice, this would only be possible if the property the subject of the agreement had not been distributed and was still available to be divided by agreement.

Item 3 - Payment splitting or flagging by court order

Proceedings on foot

396. Subject to subitems (2) to (5), subitem (1) of this transitional provision will apply section 90YX to all de facto relationships, including those that ended before the Bill commenced. This time is referred to as the start up time.

397. This will allow a court to make orders splitting the superannuation interests of parties, including those with family law proceedings already on foot in respect of their non-superannuation property interests, if those proceedings have not been finally determined at the commencement of the Bill. This means a court will be able to to make superannuation splitting orders upon application by either party.

Finalised proceedings

398. Subitem (2) expressly prevents de facto couples from seeking a superannuation splitting order under section 90YX if they have a property settlement order made under section 90SM of the FLA or section 205ZG of the FCA in force on commencement of the Bill. This provision does not apply if the couple only has an interim order in place. This is consistent with the 'clean break' principle in family law property proceedings, and will ensure certainty for parties with final orders in place.

399. The intention of including a reference to section 90SM of the FLA in this provision is to ensure that couples who resided outside of Western Australia, and had final property orders in place under section 90SM of the FLA upon commencement of the Bill, would be prevented from later applying for superannuation splitting orders under section 90YX if they subsequently move to Western Australia.

400. Subitem (3) provides that if that property settlement order is subsequently set aside after commencement of the Bill, under section 90SN of the FLA or section 205ZH of the FCA, then the couple could seek superannuation splitting orders under section 90YX.

401. The intention of including a reference to section 90SN of the FLA in this provision is to allow couples who resided outside of Western Australia, and who have final property orders set aside under section 90SN of the FLA after commencement of the Bill, to apply for superannuation splitting orders under section 90YX if they subsequently move to Western Australia.

Financial agreement in force on commencement

402. Subitem (4) expressly prevents de facto couples from seeking a superannuation splitting order under section 90YX if they have a financial agreement, made under Part 5A of the FCA, in force on commencement of the Bill.

403. Subitem (5) provides that if the financial agreement is subsequently terminated or set aside, under sections 205ZU or 205ZV of the FCA, after commencement of the Bill, then the parties could seek superannuation splitting orders under section 90YX of the FLA.

Part 3 - Amendment of the Bankruptcy Act 1966

Item 4 - Application of amendments

404. This item provides that the amendments to subsection 40(1), section 59A and paragraph 116(2)(ra) of the Bankruptcy Act 1966 will apply in relation to transfers of property (subitem 4(1)) and in relation to orders under Part 5A of the Family Court Act 1997 (WA) (subitems 4(2) and (3)) that are made after commencement.

Part 4 - Consequential amendments

Item 5 - Application of amendments

405. Item 6 provides for the application of certain consequential amendments in the Bill. While the Bill makes consequential amendments to 21 Commonwealth Acts, only 12 of those Acts are affected by the operation of this item. This is because the item applies to consequential amendments that provide for an operative time to apply in relation to a superannuation splitting agreement or superannuation splitting order made under Part VIIIC. This application provision clarifies that the relevant operative time in relation to a payment split under an agreement or order will be after commencement of Part VIIIC.

Part 5 - Transitional rules

Item 6 - Transitional rules

406. Subitem 7(1) provides that the Minister may, by legislative instrument, make rules prescribing matters of a transitional nature related to the amendments or repeals made by this Act.

407. Subitem 7(2) provides that, within 12 months of the commencement of Schedule 4 of this Bill, rules can be made under item 7 that have the effect of modifying the provisions of this Act, or any other Act or instrument. Subitem 7(3) provides that the usual rule against retrospective application of legislative instruments in subsection 12(2) of the Legislation Act 2003 will not apply to rules made under subitem 7(2).

408. Subitem 7(4) prescribes a limit on the transitional rules which may be made, and provides that the Minister may not make rules which: create an offence; provide powers of arrest or detention or entry, search or seizure; impose a tax; set an amount to be appropriated from the Consolidated Revenue Fund under an appropriation in this Act; or directly amend the text of this Act.

409. The broad transitional rule-making power proposed to be made by Item 7 has been included in the Bill because of the complex nature of the reforms being implemented by the Bill. These complexities are due to:

•

the challenges of implementing a narrow referral of power (rather than a full subject matter referral) and, related to this, the Bill's integration of superannuation splitting agreements and proceedings under Part VIIIC with Western Australian de facto property agreements and proceedings made under the relevant State law;

•

the large number of Commonwealth laws that make provision for superannuation, as evidence by the large number of consequential amendments in this Bill; and

•

the likelihood that amendments will be made to Western Australian laws to support the operation of measures in this Bill.

410. These factors may lead to situations where further rules are required to support the effective implementation of Western Australia's narrow referral of power. This transitional rule-making power will ensure that separating de facto couples in Western Australia are not disadvantaged if a technical issue in the application of this Bill, or an unintended omission from the Bill, is subsequently identified. The rule-making power will mean these issues can be addressed or rectified as quickly as possible, and can apply to the parties retrospectively as if the error or omission had not been made.