Currently, superannuation death benefits can only be paid to a person’s partner if they are married or a heterosexual de facto couple. The relevant legislation does not define a same-sex partner as being an ‘eligible person’ for the purposes of the payment of death benefits. For same-sex couples this means that if they want to receive death benefits, they need to apply to the trustee and demonstrate that they were in an ‘interdependency relationship’ with their partner.
The Same-Sex Relationships (Equal Treatment in Commonwealth Laws - Superannuation) Bill 2008 (the Bill) was introduced to Federal parliament on 28 May 2008. It is anticipated that, should the Bill be passed by parliament, it will commence as law sometime after 1 October 2008.
The proposed laws will attempt to eliminate discrimination against same sex couples and the children of same sex relationships in Commonwealth government superannuation schemes and related tax legislation, and Acts that regulate the superannuation industry. With regards to the Commonwealth government superannuation schemes, the Bill aims to eliminate discrimination by amending the Commonwealth civilian and military (defined benefit) superannuation schemes, the parliamentary, judicial and statutory legal officer pension schemes and the pension scheme for the Governor-General.
The proposed laws, if enacted, will allow same-sex couples and their children to receive reversionary superannuation benefits on the same basis as heterosexual couples. This means that if the Bill becomes law, upon the death of their partner, the dependant of the deceased will receive the lump sum payment tax free without going through the lengthy process of proving their ‘interdependency relationship’.
Even though the death benefit will be automatic through this legislation if enacted, the governing rules of the fund will also need to be considered to ensure that they allow for these changes. At the time the legislation is passed and you have a self managed super fund, amendments will need to be made to the trust document to ensure that your same-sex partner receives the death benefit.
More Changes to come in 2009
The Federal government proposes for these changes to be transitional for 2008/2009 tax year. However, the government proposes to remove same-sex discrimination in its taxation laws more generally from 1 July 2009, so it is expected that legislation giving permanent effect to the death benefit tax measures as well as other aspects of superannuation that have not been addressed such as contribution payments, will be addressed by the parliament at that time.
At present, a member of a same-sex couple cannot split superannuation contributions with their partner, an option available to married and de facto heterosexual couples since 1 January 2006. Similarly, a member of a same-sex couple cannot receive a spouse tax rebate for superannuation contributions made on behalf of their partner. Hence, from 1 July 2009 we can expect for the government to pass legislation that will also allow same-sex couples to be eligible for contributions splitting provided that the fund’s governing rules allow for this to happen. Consequently, same sex couples will have the same access to taxable concessions available to them in superannuation.
If you want more guidance on superannuation death benefits and your estate planning needs generally, you should contact us to discuss the matter further.
DOROTA BRYKS
Lawyer
Commercial & Corporate
