Dividing assets can be one of the most complex processes in a divorce or separation. In Australia, superannuation is considered a financial asset and must be included in property settlements.
Understanding how superannuation splitting works is vital to ensuring fair outcomes for both parties. Below, we explore the basics of splitting superannuation, including recent legal changes, the process and how to manage specific superannuation types like SMSFs.
Superannuation In Divorce: What Changed In Recent Years?
In April 2022, major changes were made to the way superannuation is handled during divorce and separation in Australia. The Family Law Act 1975 was amended to allow better access to superannuation information through the Australian Taxation Office (ATO), ensuring transparency and fairness. This means the parties can, in a simple process through the courts, directly access details about the other party’s superannuation to help determine a fair division, making the process easier and fairer than ever before.
Previously, discovering the details of a former partner’s superannuation could be difficult if it wasn’t disclosed. Now, with these changes, both parties can obtain accurate information to ensure a fair split of assets.
How Does Superannuation Splitting Work In Divorce?
Property settlements (and superannuation splitting) are separate to the divorce process and are usually dealt with before the divorce. Superannuation splitting is handled similarly to dividing other assets in a property settlement. Superannuation interests, whether held in a retail or industry super fund account or SMSF, are included in the property pool, and a fair division is made.
The courts can issue superannuation splitting orders, which determine how superannuation is split between the member spouse and the non-member spouse. If parties agree on the split, they can enter into a formal written agreement or a consent order. This is a legally binding document approved by the court.
However, if parties cannot reach an agreement, a court hearing may be required to resolve the division of superannuation interests.
A flagging order or agreement may be necessary if there are concerns about one party accessing the superannuation income stream before the split is finalised.
Independent legal advice is essential to navigate this process.
De Facto Relationships & Super Splitting
The divorce process and property settlement proceedings apply to both married couples and de facto couples, though the rules can vary slightly depending on the state. In particular, Western Australia has separate laws. When a relationship breaks down, whether a marriage or a de facto relationship, both parties are entitled to seek a division of superannuation interests as part of the property settlement.
Under superannuation splitting laws, superannuation is treated as part of the asset pool and must be divided fairly. The court considers both parties’ super interests, including cash assets and non-super assets, and takes into account their financial situation and contributions to the relationship.
If parties cannot reach an agreement, they may apply for superannuation splitting orders or enter into a superannuation agreement. It’s essential to seek legal advice early in the process to ensure you understand your rights and the implications of splitting superannuation in a divorce or separation.
How to Request Information About Your Ex-Partner’s Superannuation Fund
In divorce or separation proceedings, one of the first steps is to gather information about the superannuation interests of both parties. If you are unaware of the details of your ex-partner’s superannuation fund, you can request this information through the Federal Circuit and Family Court of Australia or the Family Court of Western Australia.
By submitting a Superannuation Information Request form, the court can obtain super fund details directly from the Australian Taxation Office (ATO). The ATO provides the requested information within seven days. This ensures transparency in the property settlement and reduces the chance of undisclosed superannuation interests being hidden.
A family lawyer can help guide you through the process of requesting this information and ensuring that the division of superannuation is equitable and complies with superannuation laws. It’s important to seek legal advice to understand your rights to request this information.
The Role of Independent Legal Advice in Superannuation Splitting
Seeking independent legal advice is crucial when splitting super during divorce or separation. A family lawyer can help you understand your rights and obligations under Australian family law, particularly when dividing superannuation interests. Independent legal advice ensures that the superannuation agreement or consent order is legally binding and fair for both parties.
The Federal Circuit and Family Court of Australia require that the division of superannuation is just and equitable, taking into account both financial and non-financial contributions. This guideline also helps to ensure procedural fairness throughout property settlement proceedings.
If you are unsure about the legalities of splitting your super, especially if your ex-partner’s superannuation fund is in a different super fund account, consulting a family lawyer can ensure that your super interests are correctly assessed and split according to superannuation splitting laws.
Understanding Superannuation Splitting Orders & Agreements
Superannuation splitting orders are a formal mechanism for dividing superannuation interests in a divorce or separation. Under Australian family law, superannuation is usually treated as property, and both the member spouse and non-member spouse have legal rights to their entitlements.
Superannuation splitting orders can be issued by the courts to ensure a legally binding agreement is in place for the superannuation transfer. Usually, this is done with the consent of both parties as part of a negotiated division of all of their property. A superannuation agreement is a formal written agreement between both parties, which can also address the division of superannuation interests and may be used as part of a consent order.
These orders and agreements specify the payment split of the super account between the parties and can include flagging agreements that prevent one party from accessing their superannuation income stream until a specified condition is met. If no agreement is reached, a court hearing may be necessary to determine how the super is split.
Complications With Splitting Superannuation In Self-Managed Super Funds (SMSFs)
Splitting superannuation can be complex in any property settlement, but this complexity increases when one or both parties hold super in a self-managed super fund (SMSF). Unlike standard industry or retail super funds, SMSFs are controlled by the members, who also act as trustees, meaning the parties have direct control over the fund’s investment decisions and compliance obligations.
Key challenges in family law proceedings are:
- obtaining an accurate valuation of the SMSF’s assets;
- ensuring the SMSF is compliant with superannuation laws;
- operating the SMSF as a separated couple when there is often more distrust;
- working out whether assets need to be sold for the split to occur in cash and which assets should be sold, or if assets are to be rolled over to the other party’s new fund, which assets.
The assets of a SMSF may include real estate, unlisted shares, collectables or private company investments; not just cash or listed shares. Proper up to date valuations are critical to ensure a fair division.
Superannuation held in an SMSF can be divided either by court order or through a superannuation agreement, but in both cases, legal advice is essential. Tax consequences, particularly around capital gains tax (CGT), may arise when assets are sold or transferred, so it’s essential to assess the financial impact of any proposed split.
SMSFs & Separation: Understanding The Practical Implications
Due to their unique legal and operational structure, SMSFS require careful management during separation or divorce. Because both spouses are typically members and trustees, their roles within the fund must be restructured or wound up. This adds an extra layer of complexity not present in other superannuation arrangements.
If one party wishes to leave the SMSF, their entitlement can be rolled over into another complying superannuation fund. However, the process must comply with superannuation legislation and fund rules to avoid an immediate capital gains tax (CGT) liability. Restructuring assets within the SMSF could trigger CGT or affect liquidity, especially if the fund holds illiquid assets like property.
It’s vital for both parties to engage with the SMSF’s accountant, financial adviser and legal representative early in the process. The SMSF trust deed, investment strategy and compliance obligations must all be considered when negotiating a split. Unlike larger public super funds, there is no independent trustee managing this process, so every decision made needs to be documented and legally sound.
Superannuation which is not treated as property In Property Settlements
Not all superannuation interests can be divided in a property settlement. Some are classified as non-splittable under the Family Law (Superannuation) Regulations 2025. For example, superannuation interests of $10,000 or less cannot be split. Other superannuation interests which cannot be split are those where there is no lump sum that can be split or transferred to the other party. These may be treated as an income stream only.
These typically include:
- Certain veteran and military pensions
- Some public sector defined benefit schemes
- Disability pensions paid as compensation
When a fund is not treated as property, the court may treat it as a financial resource rather than property. To ensure a fair outcome, either the division of other assets may be adjusted in favour of the party that doesn’t retain the superannuation or the income stream itself can be split. Legal advice is essential where these funds are involved, as the financial impact can be significant.
Other Considerations & Fund Types To Be Aware Of When Splitting Super
Not all superannuation funds are straightforward to split. Several unique or legacy fund types may require specialist advice due to their structure, restrictions or tax treatment.
Public sector and military schemes
Funds like CSS, PSS, DFRDB and MilitarySuper often operate as defined benefit schemes, where entitlements are based on salary and service, not a fixed account balance. Some include non-commutable pensions and may be non-splittable.
Private sector defined benefit funds
Some older corporate schemes may need actuarial valuation and are often treated differently to accumulation funds during settlement.
Untaxed funds
Some government funds are untaxed, meaning tax is paid on withdrawal. This can significantly affect post-separation payouts.
Overseas super interests
Foreign retirement savings typically fall outside Australian jurisdiction and need separate treatment. Entitlements in the United Kingdom are an exemption and may be able to be transferred to a QROPS (Qualifying Recognised Overseas Pension Scheme) in Australia.
Injury or disability super
Benefits from TPD cover or military discharge schemes may be treated as compensation or financial resources, not property.
Each of these scenarios requires careful handling, especially when dealing with valuation, tax exposure, and compliance rules. Always seek legal advice to understand how your fund type may affect the outcome.
The Impact Of Superannuation Splitting On Your Retirement Plan
When superannuation is split in divorce proceedings, it can significantly impact both parties’ retirement plans. If one party receives a portion of the other party’s super account, it may affect their retirement savings and future financial security. For example, if the non-member spouse receives a portion of the superannuation fund, they may need to manage the transferred superannuation interests in their own account.
Additionally, if the superannuation income stream is flagged, one party may not be able to access their super until retirement age or another condition is met. The division of superannuation will also be influenced by the financial situation and future needs of both parties, as well as any non-financial contributions, such as homemaking. It’s crucial to understand how super splitting will affect your long-term financial plans and seek professional legal and financial advice to protect your future retirement income.
How Is Super Split?
Superannuation splitting can be done through a court order, consent order or a financial agreement. These methods help divide superannuation entitlements between former spouses or de facto partners. While consent orders are simpler and involve both parties agreeing on the terms, a court order may be necessary if an agreement cannot be reached. Using a binding financial agreement allows involved parties to reach a private agreement that is not viewed or assessed by the courts. This may be useful when dealing with a SMSF as splitting a superannuation interest in a SMSF may raise issues of complexity as to compliance and splitting lumpy assets.
Once the division is agreed upon or ordered by the court, the superannuation fund trustee is notified to implement the split. This process ensures both parties receive a fair share of the superannuation assets, taking into account their contributions to the relationship and future needs.
What Other Factors Can Affect Superannuation Splitting?
Several factors determine how superannuation is divided during a divorce or separation. Here are the main considerations:
- Property Pool: Superannuation is treated as part of the property pool, which includes all assets and liabilities, like the family home, bank accounts, and investments.
- Contributions: Financial contributions, including wages, investments, and contributions to the superannuation fund, are considered. Non-financial contributions, such as renovations, homemaking and parenting are usually given the same weight as income-earning activities.
- Super Fund Type: The nature of the superannuation account impacts the splitting process. For example, self-managed super funds (SMSFs) and defined benefit funds have different rules compared to accumulation funds, often requiring a more complex process. The nature, form and characteristics of funds may vary and these variations can be relevant.
- Current and Future Considerations: The court considers both parties’ future needs, such as incomes, earning capacity, health and care of children and ensures that the division is fair in the long term. There is a long list of factors which are considered.
Need guidance on superannuation and financial settlement?
Superannuation is often one of the most technical and significant components of a property settlement in Australia, particularly in cases involving SMSFs, defined benefit schemes or non-splittable interests. However, even accumulation funds (which are the standard for most people who have interests in industry or retail funds), can raise complex issues, because they may be a significant part of the property pool which may not be able to accessed early as the parties are not close to retirement age.
With extensive experience in complex superannuation splits and financial matters following divorce or separation, the property settlement team at Forte Family Lawyers can help you manage the process with clarity and confidence.