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Thursday, 24 May 2001
Page: 27006


Mr WILLIAMS (Attorney-General) (1:03 PM) —I present a supplementary explanatory memorandum to the bill. I seek leave of the House to move government amendments Nos 1 to 41 together.

Leave granted.


Mr WILLIAMS —I move government amendments Nos 1 to 41:

(1) Clause 2, page 1 (lines 7 to 11), omit the clause, substitute:

2 Commencement

(1) Subject to subsection (2), this Act commences on a day to be fixed by Proclamation.

(2) If this Act does not commence under subsection (1) within the period of 18 months beginning on the day on which it receives the Royal Assent, it commences on the first day after the end of that period.

(2) Clause 3, page 2 (line 2), omit “Subject to section 2, each”, substitute “Each”.

(3) Clause 4, page 2 (lines 6 to 12), insert:

section 79 order means an order (other than an interim order) made under section 79 of the Family Law Act.

section 87 agreement means an agreement approved under section 87 of the Family Law Act.

(4) Clause 5, page 2 (lines 13 to 25), omit the clause, substitute:

5 Application of superannuation amendments

(1) Subject to this section, the superannuation amendments apply to all marriages, including those that were dissolved before the startup time.

(2) Subject to subsections (3) and (4), the superannuation amendments do not apply to a marriage if a section 79 order, or a section 87 agreement, is in force in relation to the marriage at the startup time.

(3) If a section 79 order that is in force at the startup time is later set aside under paragraph 79A(1)(a), (b), (c) or (d) of the Family Law Act, then the superannuation amendments apply to the marriage from the time the order is set aside.

(4) If an approval of a section 87 agreement that is in force at the startup time is later revoked on a ground specified in paragraph 87(8)(a), (c) or (d) of the Family Law Act, then the superannuation amendments apply to the marriage from the time the approval is revoked.

(5) Part VIIIB of the Family Law Act does not apply in relation to a financial agreement that was made before the startup time.

(5) Schedule 1, item 3, page 3 (line 27), omit “(e)”, substitute “(f)”.

(6) Schedule 1, item 3, page 3 (line 31), omit “(f)”, substitute “(g)”.

(7) Schedule 1, item 4, page 4 (lines 11 to 14), omit subsection (1), substitute:

(1) This Part has effect despite anything to the contrary in any of the following instruments (whether made before or after the commencement of this Part):

(a) any other law of the Commonwealth;

(b) any law of a State or Territory;

(c) anything in a trust deed or other instrument.

(8) Schedule 1, item 4, page 4 (after line 25), insert:

approved deposit fund has the same meaning as in the SIS Act.

(9) Schedule 1, item 4, page 4 (line 26), omit the definition of breakdown declaration.

(10) Schedule 1, item 4, page 5 (before line 1), insert:

business day means any day except:

(a) a Saturday or Sunday; or

(b) a day that is a public holiday in the place concerned.

(11) Schedule 1, item 4, page 5 (line 6), omit “within the meaning of the SIS Act”.

(12) Schedule 1, item 4, page 6 (after line 9), insert:

percentage-only interest means a superannuation interest prescribed by the regulations for the purposes of this definition.

(13) Schedule 1, item 4, page 6 (after line 14), insert:

secondary government trustee means a trustee that:

(a) is the Commonwealth, a State or Territory; and

(b) is a trustee only because of the operation of section 90MDA.

separation declaration has the meaning given by section 90MP.

(14) Schedule 1, item 4, page 7 (lines 5 to 7), omit the definition of working day.

(15) Schedule 1, item 4, page 7 (after line 7), after section 90MD, insert:

90MDA Extended meaning of trustee

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 this Part to the trustee of the plan include references to that person.

(16) Schedule 1, item 4, page 7 (after line 21), at the end of section 90ME, add:

(3) If a payment is made to another person for the benefit of 2 or more persons who include the spouse, then the payment is nevertheless a splittable payment, to the extent to which it is paid for the benefit of the spouse.

(17) Schedule 1, item 4, page 8 (line 28) to page 9 (line 9), omit section 90MI, substitute:

90MI Operative time for payment split

The operative time for a payment split under a superannuation agreement or flag lifting agreement is the beginning of the fourth business day after the day on which a copy of the agreement is served on the trustee, accompanied by:

(a) either:

(i) a copy of the decree absolute dissolving the marriage; or

(ii) a separation declaration with a declaration time that is not more than 28 days before the service on the trustee; and

(b) if the agreement specifies a method for calculating a base amount—a document setting out the amount calculated using that method; and

(c) if a form of declaration is prescribed for the purposes of this paragraph—a declaration in that form.

Note: The base amount is used to calculate the entitlement of the non-member spouse under the regulations.

(18) Schedule 1, item 4, page 9 (line 10) to page 10 (line 5), omit section 90MJ, substitute:

90MJ Payment split under superannuation agreement or flag lifting agreement

(1) This section applies to a superannuation interest if:

(a) the interest is identified in a superannuation agreement or flag lifting agreement; and

(b) if the interest is a percentage-only interest—the agreement does one of the following:

(i) it specifies a percentage that is to apply for the purposes of this sub-paragraph;

(ii) it specifies a percentage that is to apply to all splittable payments in respect of the interest; and

(c) if the interest is not a percentage-only interest—the agreement does one of the following:

(i) it specifies an amount as a base amount in relation to the interest for the purposes of this Part;

(ii) it specifies a method by which such a base amount can be calculated at the time when the agreement is served on the trustee under section 90MI;

(iii) it specifies a percentage that is to apply to all splittable payments in respect of the interest; and

(d) the agreement is in force at the operative time; and

(e) the interest is not an unsplittable interest.

Note: The base amount is used to calculate the entitlement of the non-member spouse under the regulations.

(2) The following provisions begin to apply to the interest at the operative time.

(3) Whenever a splittable payment becomes payable in respect of the interest:

(a) the non-member spouse is entitled to be paid the amount (if any) that is calculated under subsection (4); and

(b) there is a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for the payment split.

(4) The amount is calculated as follows:

(a) if the agreement specifies a percentage as mentioned in subparagraph (1)(b)(ii) or subparagraph (1)(c)(iii)—the amount is calculated by applying the specified percentage to the splittable payment; or

(b) otherwise—the amount is calculated in accordance with the regulations.

(5) Subject to section 90MV, this section continues to apply to the superannuation interest even if the agreement referred to in subsection (1) later ceases to be in force.

(19) Schedule 1, item 4, page 10 (lines 7 to 17), omit section 90MK, substitute:

90MK Operative time for payment flag

(1) The operative time for a payment flag under a superannuation agreement is:

(a) the service time, if the eligible superannuation plan is a self-managed superannuation fund; or

(b) otherwise, the beginning of the fourth business day after the day on which the service time occurs.

(2) In this section:

self-managed superannuation fund has the same meaning as in the SIS Act.

service time means the time when a copy of the agreement is served on the trustee, accompanied by:

(a) either:

(i) a copy of the decree absolute dissolving the marriage; or

(ii) a separation declaration with a declaration time that is not more than 28 days before the service on the trustee; and

(b) if a form of declaration is prescribed for the purposes of this paragraph—a declaration in that form.

(20) Schedule 1, item 4, page 12 (lines 7 and 8), omit paragraph (1)(b), substitute:

(b) specifies an amount, method or percentage in accordance with subsection 90MJ(1).

(21) Schedule 1, item 4, page 12 (line 27), omit “90K(1)(e)”, substitute “90K(1)(f)”.

(22) Schedule 1, item 4, page 13 (line 15), omit “Breakdown”, substitute “Separation”.

(23) Schedule 1, item 4, page 13 (line 16), omit “breakdown”, substitute “separation”.

(24) Schedule 1, item 4, page 14 (lines 18 to 21), omit section 90MR, substitute:

90MR Enforcement by court order

(1) A court may make such orders as it thinks necessary for the enforcement of a payment split or payment flag under this Division.

(2) The question whether a superannuation agreement or flag lifting agreement is valid, enforceable or effective is to be determined by the court according to the principles of law and equity that are applicable in determining the validity, enforceability and effect of contracts and purported contracts.

(3) Without limiting subsection (2), in proceedings relating to a superannuation agreement or flag lifting agreement, the court has the same powers, may grant the same remedies and must have the same regard to the rights of third parties as the High Court has, may grant and is required to have in proceedings in connection with contracts or purported contracts, being proceedings in which the High Court has original jurisdiction.

(25) Schedule 1, item 4, page 14 (line 28), omit the note, substitute:

Note 1: Although the orders are made in accordance with this Division, they will be made under section 79. Therefore they will be generally subject to all the same provisions as other section 79 orders.

Note 2: Sections 71A and 90MO limit the scope of section 79.

(26) Schedule 1, item 4, page 15 (lines 3 to 24), omit section 90MT, substitute:

90MT Splitting order

(1) A court, in accordance with section 90MS, may make the following orders in relation to a superannuation interest (other than an unsplittable interest):

(a) if the interest is not a percentage-only interest—an order to the effect that, whenever a splittable payment becomes payable in respect of the interest:

(i) the non-member spouse is entitled to be paid the amount (if any) calculated in accordance with the regulations; and

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

(b) an order to the effect that, whenever a splittable payment becomes payable in respect of the interest:

(i) the non-member spouse is entitled to be paid a specified percentage of the splittable payment; and

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

(c) if the interest is a percentage-only interest—an order to the effect that, whenever a splittable payment becomes payable in respect of the interest:

(i) the non-member spouse is entitled to be paid the amount (if any) calculated in accordance with the regulations by reference to the percentage specified in the order;

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

(d) such other orders as the court thinks necessary for the enforcement of an order under paragraph (a), (b) or (c).

(2) Before making an order referred to in subsection (1), the court must determine the value of the interest as follows:

(a) if the regulations provide a method for determining the value of the interest, the court must determine the value in accordance with the regulations;

(b) otherwise, the court must determine the value by such method as it considers appropriate.

(3) Regulations for the purposes of paragraph (2)(a) may provide for the value to be determined wholly or partly by reference to methods or factors that are approved in writing by the Minister for the purposes of the regulations.

(4) Before making an order referred to in paragraph (1)(a), the court must allocate a base amount to the non-member spouse, not exceeding the value determined under subsection (2).

Note: The base amount is used to calculate the entitlement of the non-member spouse under the regulations.

(27) Schedule 1, item 4, page 16 (lines 1 to 7), omit subsection 90MU(2), substitute:

(2) In deciding whether to make an order in accordance with this section, 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.

(28) Schedule 1, item 4, page 16 (line 28), omit “dates, starting with the earliest date”, substitute “times, starting with the earliest time”.

(29) Schedule 1, item 4, page 16 (line 30), omit “date”, substitute “time”.

(30) Schedule 1, item 4, page 17 (line 2), omit “date”, substitute “time”.

(31) Schedule 1, item 4, page 17 (line 5), omit “dates”, substitute “times”.

(32) Schedule 1, item 4, page 17 (lines 10 to 24), omit section 90MY, substitute:

90MY Fees payable to trustee

(1) The regulations may:

(a) allow trustees to charge reasonable fees:

(i) in respect of a payment split; or

(ii) otherwise in respect of the operation of this Part in relation to a superannuation interest; and

(b) prescribe the person or persons liable to pay those fees.

(2) If any such fee remains unpaid after the time it is due for payment, then the trustee may recover any unpaid amount by deduction from amounts that would otherwise become payable by the trustee, in respect of the superannuation interest, to the person who is liable to pay the fee.

(33) Schedule 1, item 4, page 17 (line 27), after “regulated superannuation fund”, insert “or approved deposit fund”.

(34) Schedule 1, item 4, page 18 (line 5), after “Income Tax Assessment Act 1936”, insert “or an exempt public sector superannuation scheme within the meaning of the SIS Act”.

(35) Schedule 1, item 4, page 18 (after line 21), at the end of subsection (1), add:

Example: X has a superannuation interest that is subject to a 50:50 payment split in favour of Y. Y serves a waiver notice on the trustee, in exchange for a lump sum payment made by the trustee to another fund for the benefit of Y. The effect is that X's payments will continue to be reduced by half, but Y will receive no further payments under the payment split.

(36) Schedule 1, item 4, page 18 (line 30) to page 19 (line 21), omit section 90MZB, substitute:

90MZB Trustee to provide information

(1) An eligible person may make an application to the trustee of an eligible superannuation plan for information about a superannuation interest of a member of the plan.

(2) The application must be accompanied by:

(a) a declaration, in the prescribed form, stating that the applicant requires the information for either or both of the following purposes:

(i) to assist the applicant to properly negotiate a superannuation agreement;

(ii) to assist the applicant in connection with the operation of this Part in relation to the applicant; and

(b) the fee (if any) payable under regulations made for the purposes of section 90MY.

(3) If the trustee receives an application that complies with this section, the trustee must, in accordance with the regulations, provide information about the superannuation interest to the applicant.

Penalty: 50 penalty units.

Note: The penalty for a body corporate is 250 penalty units. See subsection 4B(3) of the Crimes Act 1914.

(4) Regulations for the purposes of subsection (3) may specify circumstances in which the trustee is not required to provide information.

Example: The regulations might provide that a secondary government trustee is not required to provide information where there is another trustee of the eligible superannuation plan who is better able to provide the information.

(5) The trustee must not, in response to an application under this section by a spouse of the member, provide the spouse with any address of the member. For this purpose, address includes a postal address.

Penalty: 50 penalty units.

Note: The penalty for a body corporate is 250 penalty units. See subsection 4B(3) of the Crimes Act 1914.

(6) If the trustee receives an application under this section from a person other than the member, the trustee must not inform the member that the application has been received.

Penalty: 50 penalty units.

Note: The penalty for a body corporate is 250 penalty units. See subsection 4B(3) of the Crimes Act 1914.

(7) 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 about the superannuation interest concerned. Such regulations may prescribe penalties for contravention, not exceeding 10 penalty units.

(8) In this section:

eligible person, in relation to a superannuation interest of a member of an eligible superannuation plan, means:

(a) the member; or

(b) a spouse of the member; or

(c) a person who intends to enter into a superannuation agreement with the member.

(37) Schedule 1, item 4, page 20 (lines 3 to 7), omit subsection (1), substitute:

(1) An order under this Part in relation to a superannuation interest may be expressed to bind the person who is the trustee of the eligible superannuation plan at the time when the order takes effect. However:

(a) in the case of a trustee who is not a secondary government trustee—the court cannot make such an order unless the trustee has been accorded procedural fairness in relation to the making of the order; and

(b) in the case of a secondary government trustee:

(i) the court cannot make such an order unless another trustee of the eligible superannuation plan has been accorded procedural fairness in relation to the making of the order; and

(ii) the court may, if it thinks fit, require that the secondary government trustee also be accorded procedural fairness.

(38) Schedule 1, item 4, page 21 (after line 6) after section 90MZG, insert:

90MZH Terminating employment because of payment flag etc.

A person must not terminate the employment of an employee on either of the following grounds:

(a) a payment flag is operating in respect of a superannuation interest of the employee;

(b) a superannuation agreement or splitting order is in force in respect of a superannuation interest of the employee.

Penalty: 100 penalty units.

Note: The penalty for a body corporate is 500 penalty units. See subsection 4B(3) of the Crimes Act 1914.

(39) Schedule 1, page 21 (after line 25), after item 7, insert:

7A Subsection 3(2)

Insert:

holder,in relation to an RSA, has a meaning affected by section 4B.

(40) Schedule 1, page 22 (after line 1), after item 8, insert:

8A Subsection 3(2)

Insert:

person who has an interest, in relation to a death benefit, has a meaning affected by section 4B.

(41) Schedule 1, item 9, page 22 (lines 4 to 19), omit section 4B, substitute:

4B Modified meanings of beneficiary, member etc.

(1) The regulations may provide that, for the purposes of this Act or specified provisions of this Act:

(a) a person is to be treated as being a qualifying person; or

(b) a person is not to be treated as being a qualifying person.

(2) Without limiting subsection (1), regulations for the purposes of that subsection may be made in relation to a person who is entitled to become, or has applied to become, a member of a superannuation fund or a beneficiary of an approved deposit fund.

(3) This Act applies with such modifications (if any) as are prescribed in relation to a person who is a qualifying person because of regulations made for the purposes of this section.

(4) In this section:

modifications includes additions, omissions and substitutions.

qualifying person means:

(a) a member of a superannuation fund; or

(b) a beneficiary of an approved deposit fund; or

(c) a person who has an interest in a death benefit; or

(d) the holder of an RSA.

The bill was introduced into the House of Representatives on 30 April 2000 and contains amendments to the Family Law Act 1975 to allow superannuation to be divided on marriage breakdown. The bill was referred on 10 May 2000 to the Senate Select Committee on Superannuation and Financial Services for inquiry and report. During its deliberations on the bill, the committee also considered the draft Family Law Amendment Regulations and the draft Superannuation Industry (Supervision) Amendment Regulations, the SI(S) Amendment Regulations. On 28 November 2000 the committee tabled an interim report and the committee's final report was tabled in the Senate on 6 March 2001. Many of the comments and recommendations in that report deal with matters that are contained in the draft Family Law Amendment Regulations and the draft SI(S) Amendment Regulations and are being considered in the context of the development of amendments to the regulations.

There are, however, a number of recommendations in the final report that properly deal with issues contained in the bill, and these will be implemented by the proposed government amendments which constitute the government's response to the committee's final report. The amendments cover a new commencement provision—the application provision—extending the meaning of `transfer'; a new percentage-only interest; a revised regime for splitting orders; provisions dealing with fees payable to trustees; the provision of information; orders binding on trustees; and the prevention of termination of employment. I commend those amendments to the House.

Amendments agreed to.

Bill, as amended, agreed to.