Same-sex super: What you need to know

If you’re part of a same-sex couple, what are your rights when it comes to superannuation?

Despite many countries around the world paving the way, Australia is yet to legally recognise same-sex marriage. But since 2008, when it comes to your superannuation, the law has become much more favourable to same-sex couples. We look at the changes, and the work that still needs to be done.

Whether you’re married, de facto heterosexual or same sex, you will be treated equitably when it comes to superannuation benefits. Same-sex couples can now have their relationship recognised by their superannuation fund, thanks to two major changes in the law:

Same-sex super

1. Same-Sex Relationships (Equal Treatment in Commonwealth Laws–Superannuation) Bill 2008

This bill extended the word ‘spouse’ to include same-sex partners who register their relationships, or who live on a genuine domestic basis in a relationship.

2. Family Law Amendment (De Facto Financial Matters and Other Measures) Bill 2008

This revision broadened the definition of ‘de facto’ to include same-sex relationships, and the definition of ‘child’ to also include adopted children, stepchildren and ex-nuptial children.

These changes have significant implications for same-sex couples and their superannuation arrangements.

Making contributions

The refinements mean that same-sex couples are now eligible for superannuation contributions splitting. This allows same-sex partners to direct super contributions into their spouse's account to boost retirement savings. Despite being transferred to the spouse, these split contributions still count towards the member's own concessional contributions cap, rather than that of their spouse.

Establishing and running self-managed super funds (SMSFs)

Some of the biggest changes relate to establishing and running self-managed super funds (SMSFs). Same-sex couples are now considered relatives, so SMSFs can’t lend money to their same-sex partners or their relatives, including children.

The eligibility rules for SMSF members have also become a lot clearer for a same-sex couple wanting to run an SMSF together. Normally, an SMSF member’s employee can’t become a member of the fund unless they are related. Now that same-sex couples are considered related, they will not be disqualified persons if one member works for the other member.

Relationship breakdown

Same-sex de facto couples are now covered by the Family Law Act 1975, and as such have the same rights as heterosexual de facto couples if a relationship breaks down. As such they can access the Family Court of Australia or the Federal Circuit Court of Australia for property division or spousal maintenance matters, which includes taking superannuation assets into account when splitting.

Same-sex death benefits

The legal reforms also allow private sector superannuation trustees to make same-sex couples and their children eligible for reversionary benefits. This means that same-sex partners and their children can now receive death benefits from their partner’s private superannuation fund.

They no longer have to pass a special test confirming they had an ‘interdependent’ relationship, as this was deemed discriminatory compared to the way opposite sex couples are treated.

The ATO has also released an Interpretative Decision (ATO ID 2011/83) on whether or not the former spouse of a same-sex couple qualifies as a superannuation death benefits dependant, even though the relationship ended prior to same-sex couples being included as spouses.

It now considers former same-sex partners to be included in the definition of spouse, and thus as a death benefits dependant. They will receive the same favourable tax treatment on the payout received as opposite-sex couples

Looking ahead

Australia still has some way to go when it comes to relationship equality for all. But the good news is that things have improved, and establishing an SMSF with a same-sex partner is now as easy and safe as it is for opposite-sex couples.

If you’d like further information on having a more effective super strategy and how an SMSF could benefit you and your partner, download an information pack. If you’re ready to establish an SMSF, you can apply now with ESUPERFUND.

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