The Same-Sex Relationships (Equal Treatment in Commonwealth Laws – Superannuation) Act 2008 (Cth) No 134 of 2008 received Royal Assent on 4 December 2008.
The Act is the Commonwealth Government's response to the perceived discrimination against same-sex partners and the children of same-sex couples in the laws which govern superannuation funds. The Act has changed the rules in those laws that prescribe the availability and tax treatment of superannuation death benefits to same-sex partners and the children of same-sex couples.
Of particular interest are the amendments to the Superannuation Industry (Supervision) Act 1993 (Cth) (the SIS Act), the Retirement Savings Accounts Act 1997 (Cth) (the RSA Act) and the Income Tax (Transitional Provisions) Act 1997 (Cth) (the Tax Act). These amendments generally have retrospective effect, from 1 July 2008.
There are also amendments to a number of other Acts, such as the Acts Interpretation Act 1901 (Cth).
SIS Act amendments
The Act has amended the SIS Act in the following key respects:
- the definition of "spouse" in subsection 10(1) has been expanded as follows:
- another person (whether of the same sex or a different sex) with whom the person is in a relationship that is registered under a law of a State or Territory prescribed for the purposes of section 22B of the Acts Interpretation Act 1901 as a kind of relationship prescribed for the purposes of that section; and
- another person who, although not legally married to the person, lives with the person on a genuine domestic basis in a relationship as a couple."
The new concept of living with a person on a genuine domestic basis "in a relationship as a couple" (in paragraph (b)) has replaced the previous, narrower concept of living with a person on a genuine domestic basis "as the husband or wife of the person". This expanded definition of "spouse" means that partners in same-sex relationships (within the definition) are now included as part of the object of the operation of a superannuation fund.
Partners in registered relationships under prescribed State and Territory laws (in paragraph (a)) also come within the definition;
- the definition of "child" in subsection 10(1) has been expanded as follows:
- an adopted child, a step-child or an ex-nuptial child of the person; and
- a child of the person's spouse; and
- someone who is a child of the person within the meaning of the Family Law Act 1975."
This expanded definition of "child" means that children of same-sex couples (within the definition) are now included as part of the object of the operation of a superannuation fund. The new definition also incorporates by reference the expanded definition of "child" in the Family Law Act 1975 (Cth) which includes, for example, a child born as a result of an artificial conception procedure, or a child who is a child of a person because of a State or Territory court order giving effect to a surrogacy agreement; and
- the definitions of "relative" in subsections 65(6) (which relates to the scope of the prohibition against lending to fund members and their relatives) and 70E(4) (which relates to the scope of the "associate" concept) are deleted and replaced with a new definition of "relative" in subsection 10(1) in terms that are almost identical to those deleted definitions, as follows:
- a parent, grandparent, brother, sister, uncle, aunt, nephew, niece, lineal descendant or adopted child of the individual or of his or her spouse;
- a spouse of the individual or of any other individual referred to in paragraph (a)."
However, a new subsection 10(5) confirms that "relative" now has an expanded meaning, by clarifying when one person is a "relative" of another person, in the following terms:
In other words, although the actual definition of "relative" has hardly changed, "relative" is now an expanded concept as a consequence of the expanded definition of "child".
The expanded definitions of "spouse" and
"child" affect the operation of other provisions in the
SIS Regulations, such as the cashing of a member's benefits in
relation to a child in regulation 6.21.
In summary, the Act has abolished the previous gender-based definition of "spouse" so that same sex couples are now treated in the same way as married couples and opposite-sex de facto couples. A superannuation fund trustee can now make death benefit payments to same-sex partners and the children of same-sex couples in the same way as such payments can be made to couples of different sexes and their children.
RSA Act amendments
The Act has made parallel amendments to the RSA Act in that the definitions of "spouse" and "child" are similarly expanded. This has had the effect of expanding the definition of "dependant" in section 20.
Tax Act amendments
The Act has also expanded the definitions of "spouse" and "child" in the Tax Act for the 2008-2009 income year, by incorporating by reference the new definitions of "spouse" and "child" in the SIS Act. This means that the trustee of a superannuation fund who pays a superannuation lump sum death benefit to a same-sex partner or a child of a same-sex couple can now claim a deduction where the fund refunds tax paid on contributions during the lifetime of the deceased member.
The Act has also amended the definition of "death benefit dependant" for the 2008-2009 income year in a similar way. This means that a same-sex partner or a child of a same-sex couple under the age of 18 is now entitled to the death benefit tax concessions without having to prove financial dependency or an interdependency relationship.
In related reform, the Family Law Act 1975 (Cth) has been amended by the Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 (Cth) to give de facto couples – both opposite-sex and same sex – access to the federal family law property settlement and spouse maintenance regime.
This amending Act received Royal Assent on 21 November 2008 and generally commenced on that date. Among other things, the amending Act has extended superannuation splitting arrangements under Part VIIIB of the Family Law Act to parties to a de facto relationship, and extended the CGT roll-over relief on the transfer of assets on marriage breakdown.
Action for superannuation trustees
Following these reforms, superannuation trustees will want to:
- review the trust deed to see whether the definition of "dependant" is as broad as the definition in the SIS Act of "dependant", now that the definitions of "spouse" and "child" in the Act have been expanded. If it is not, the trustee may decide to amend the trust deed. Any definitions of "spouse" and "child" should also be reviewed;
- review the Product Disclosure Statement and other documentation to see whether any updating is required. In particular, it may be necessary to update any statements made about the classes of persons to whom death benefits can be paid (eg in binding death benefit nomination forms and claim forms);
- where the trust deed allows binding death benefit nominations – consider notifying members of the change to the law as a "significant event" for the purposes of section 1017B of the Corporations Act 2001 (Cth), especially as some members may have arranged their affairs on the basis of the previous law. Generally, such notification must be given "as soon as practicable after, but not more than 3 months after" the event: subsection 1017B(5);
- make appropriate changes to the trustee's policies and procedures for the payment of death benefits and superannuation splitting; and
- consider mentioning the reforms, and the trustee's response to them, in the trustee's next annual report.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.