Family law rate updated but drafting of order still key

For most married and de facto couples, superannuation is considered “property” and as such can be divided or “split” when a relationship has irretrievably broken down.

A court order or super agreement may require one member’s superannuation to be split with the other spouse, known as the “non-member spouse”. The split must occur within a specified timeframe.

The super agreement or court order includes details about how much super is to be split from one spouse (the “member spouse”) to the non-member spouse. This amount is called the “base amount”.

However, a non-member spouse may be entitled to more than the base amount (called the “adjusted base amount”), if the payment split occurs after the “operative time” – that is, the date the split is required to take effect under the court order or super agreement.

Whilst large funds will adjust the base amount by the fund’s actual earnings rate, SMSFs are required to apply a statutory interest rate for the period from the operative time until the split actually happens (the “adjustment period”). Where the adjustment period is the financial year beginning on 1 July 2026, the statutory interest rate to be used is 6.10% pa.

Where the non-member spouse’s payment split entitlement will ultimately be transferred to another fund or paid as a lump sum (if eligible), it may be worth drafting the super agreement or court order to say that:

• the non-member spouse’s entitlement will firstly be allocated to a new interest created for them within the SMSF, and then
• transferred to another fund or paid out as a lump sum

Because the first transaction usually does not require a physical transfer of cash or assets, the payment split can be effected at the operative time, minimising or eliminating any adjustment period and in turn any adjustment to the base amount.

Leigh Mansell is presenting a session on 'Divorce & SMSFs' at our upcoming Super Intensive Day. Join us in-person or online. Register here.