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Superannuation & Divorce: The Split Of Assets Isn’t Always 50/50…

Were you aware that if you were to split up with your current partner, you may be able to file a legal claim for up to half your superannuation (under certain circumstances?

In all states (bar Western Australia), you don’t need to be married, have kids or even own a house together for your super to be split in a relationship breakdown. The superannuation of both partners is included in the pool of assets to be divided upon the separation.

According to the Federal Attorney General’s website, superannuation can be split either by:

  • an order of the Federal Circuit and Family Court of Australia (or Family Court of Western Australia for married couples in Western Australia); or
  • a superannuation agreement (a financial agreement that deals with a superannuation interest).

The Family Law Act 1975 gives the Family Court the power to deal with the superannuation interests of spouses (including de facto spouses). Superannuation cannot be taken as a cash payment and is usually rolled over to the recipient’s own superannuation account.

These laws were designed to tackle the longstanding issue where one person in a relationship – usually a woman – would have a tiny amount of super relative to her partner.

You don’t have to be married to potentially split your assets.

It applies if you have a child together or have been in a de facto relationship for at least two years. The definition of a de facto relationship under section 4AA of the Family Law Act 1975 is based on whether you were living together in a genuine domestic relationship.

Remember that any split isn’t necessarily half-half. You can enter into an agreement without going to court, but if you do end up in court, the judge will take into account the relevant circumstances including whether you have kids, direct and indirect financial contributions to the relationship, and the ongoing needs of each party.

If you’re someone who often finds it difficult to make large lump sum payments for goods or services, you may want to consider looking into “Buy Now Pay Later” services.

Buy now pay later essentially means that, rather than paying in a full lump sum payment for a product or services rendered, there may be an option to pay through instalments of a certain amount over a set period to make the sum of the full amount in total. This method should allow you to pay in full for the product or service without overly straining your finances – you pay back what you can, as agreed upon when you begin the buy now pay later service.

Some popular buy now pay later services include Afterpay, Zip Pay, Brightepay, and some credit card networks such as  Mastercard and Visa, can offer buy now pay later arrangements.

Though it can be a convenient, immediate solution, it may be challenging to juggle the necessary repayments with other financial commitments. It’s not always the most appropriate method for people, and you should bear in mind your situation and ability in paying back the amounts. 

Before you sign up, keep in mind: 

  • It becomes easier to overspend with buy now pay later services, so know your limits on what you can and can’t afford.
  • You will be charged fees and costs to use the service, which can add up to a princely sum in and of itself.
  • Keeping track of your payments can be tricky if you’ve signed up for multiple services.
  • It could affect your loan applications for a car or mortgage as lenders consider buy now pay later spending just as much as your credit score.
  • Late repayments can appear on your credit report, which affects your ability to borrow money in the future.
  • Layby can be a cheaper alternative to buy now pay later, with no account-keeping or late fees to consider

If you are someone who could make use of BNPL services, you may wish to:

  • Ensure that when using the BNPL service, you stick to a set limit on what you spend so that you can comfortably pay it back later. 
  • Aim only to have one BNPL account at a time to manage payments through, rather than confuse yourself with multiple payments across different providers.
  • Always budget for bills, loan payments and BNPL payments, and 
  • Rather than use your credit card for payments to your BNPL account, consider linking to your debit account instead.

If you would like assistance in planning your financial future, help in managing your budget or some friendly advice, see us for a chat about what we can do for you.

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John Briggs

Jane Noller has been my accountant for the last 15 plus years. I can testify to Jane’s professionalism and expeditious manner in dealing with the day to day issues that surrounds our business accounting.

John Briggs

Registered Building Certifier