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Same-sex couples to now receive equal treatment under superannuation and taxation laws

For the first time in Australia, partners in same-sex relationships and children of same-sex couples will receive equal treatment under superannuation and taxation legislation as heterosexual couples and their children, for the purpose of entitlements to death benefit payments.

Implications for employers

Employers should liaise with their superannuation providers to ensure all relevant documents, including policies, procedures and trust deeds, are updated to reflect these changes.

Background

The Same-Sex Relationships (Equal Treatment in Commonwealth Laws - Superannuation) Act 2008 (Cth) (Act) expands the definition of “spouse” and “child” in superannuation and taxation legislation to eliminate discrimination against same-sex partners and their children.

The Act came into force on 1 December 2008. However, various aspects operate retrospectively from July 2008.

Before these recent amendments, superannuation legislation excluded same-sex partners from the definition of “spouse”. A person was considered a “spouse” if they lived “as the husband or wife of the person”. As a consequence, only married persons or people living in opposite-sex de facto arrangements were captured by the definition. This eliminated the potential for partners of same-sex couples and their children to receive superannuation death benefit payments or to be treated as dependants under taxation legislation.

The Act has changed the definition of “spouse” and “child” in superannuation legislation to address this discrimination and to provide equal treatment to same-sex couples and their children, as heterosexual couples and their children.

Changes to definitions

Schedule 4 of the Act alters regulatory superannuation and related taxation legislation including the Retirement Savings Accounts Act 1997 (Cth) (RSA Act), Small Superannuation Accounts Act 1995 (Cth) (SSA Act), Superannuation (Government Co-contribution for Low Income Earners) Act (Cth) 2003 (Co-contribution Act), Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act) and the Income Tax (Transitional Provisions) Act 1997 (Cth) (Tax Act).

The definitions of “spouse” and “child” in each of these Acts have been expanded. These changes are effective from July 2008.

“Spouse” now includes a “person who lives with another person on a genuine domestic basis in a relationship as a couple”. There is no distinction made between whether the person is of the same sex or a different sex, married or in a de facto relationship.

The definition of “child” is amended to include children of same-sex couples provided the child is the product of the person’s relationship with their partner. A child will satisfy this criteria if the child is the birth child of a woman in the relationship, or the biological child of at least one person in the relationship.

The definitions of “relative” in the SIS Act and “dependant” in the RSA Act are also expanded to reflect the updated definition of “child”.

Tax implications

For the 2008-2009 income year, an amended definition of “death benefit dependant” will be included in the Tax Act to accommodate the changes to “spouse” and “child” in the SIS Act. Previously, tax concessions were only available where same-sex partners met the criteria for an interdependency relationship. Now, same-sex partners and children under the age of 18 of same-sex couples are automatically entitled to receive tax concessions on death benefit payments.

The changes also mean a trustee of a superannuation fund making a lump sum payment on a member’s death to a same-sex partner or child of a same-sex couple can claim a taxation deduction. This deduction applies where the superannuation fund refunds tax paid on contributions made during the lifetime of a deceased member.

Despite the Tax Act amendments at present being restricted to the 2008-2009 income year, it is intended this amendment will also apply in future years.

Same-Sex Relationships (Equal Treatment in Commonwealth Laws - Superannuation) Act 2008 (Cth)

Who does this affect?
All Australian employers

What do you need to do?
Ensure you are updated on recent developments

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