When a marriage or de facto relationship breaks down, superannuation can be split as part of the family law property settlement. Super splitting is not automatic — it requires a formal agreement or court order.
Why Super Is Included in Property Settlement
Super is treated as property under the Family Law Act 1975 (Cth). This means it is included in the pool of assets to be considered in a property settlement — alongside the family home, savings, investments, and other assets.
The total value of both parties’ super is assessed, and a settlement aims to achieve a fair division based on:
- Each party’s financial and non-financial contributions during the relationship
- Each party’s future financial needs (health, earning capacity, care of children)
- Duration of the relationship
How Super Splitting Works
Super splitting does not mean you receive cash immediately — the split amount is transferred to your own super fund and remains preserved until you meet a condition of release (e.g., age 60 + retired).
Step 1: Value the Super
Your family lawyer or financial adviser obtains the super valuations for both parties. For accumulation accounts, the value is the account balance. For defined benefit funds, the value is calculated using a specific formula provided by the fund.
Step 2: Reach an Agreement or Obtain a Court Order
Super can be split via:
- Binding Financial Agreement (BFA): A private agreement made with legal advice — does not require court involvement
- Consent Order: A court order made with both parties’ agreement — court approves but no hearing required
- Court Order: Ordered by the court after contested proceedings
Step 3: Notify the Super Fund
The fund must be served with the agreement or order. The fund splits the amount as required — either:
- Transferring a portion to the receiving party’s existing super fund, or
- Creating a separate “base amount” in the existing fund for the receiving party
Step 4: Access Rules
The split amount remains in the receiving party’s super and is subject to normal preservation rules — you cannot access it until you meet a condition of release (typically age 60 + retirement).
Flagging Orders
While a settlement is being negotiated, a flagging order can prevent either party’s super fund from paying any benefit. This ensures the fund doesn’t pay out (e.g., to the other party on retirement) while negotiations are ongoing.
What Can Be Split?
- Accumulation super accounts: Full balance can be split
- Account-based pensions (in retirement phase): Can be split
- Defined benefit funds: Can be split — subject to specific rules
- SMSF assets: Can be split — but SMSF members may need to restructure the fund
Does the Receiving Party Receive It in Cash?
No — unless they have independently met a condition of release. The split amount goes into super and remains preserved.
Tax on Super Splitting
Super splitting is generally not a taxable event at the time of the split. The transferred amount retains its existing tax components and is taxed under normal super rules when eventually withdrawn by the receiving party.
Getting Help
Super splitting in family law requires both family law legal advice and potentially financial advice. Key contacts:
- Family lawyer: Required for binding financial agreements and court orders
- Licensed financial adviser: To value and optimise the super split within the overall settlement
- Legal Aid: Free or low-cost legal advice for those on lower incomes
For more: Super for Women, Super and De Facto Relationships, Estate Planning and Super. For legal and financial advice on separation and super, speak with a licensed financial adviser via MoneySmart.