A legal loophole that allowed the funnelling of money into superannuation to defeat creditors will be closed, under changes announced by the Federal Attorney General and the Minister for Revenue and Assistant Treasurer.
The amendments will help prevent unscrupulous debtors from transferring assets into superannuation before filing for bankruptcy. In determining whether superannuation contributions have been made in a bid to foil creditors, courts will be able to consider a person’s history of contributions. They will also be able to consider whether any contributions are out of character for the individual in question.
According to the Attorney General, Philip Ruddock, and the Minister for Revenue and Assistant Treasurer, Peter Dutton, the reforms have been developed following extensive public consultation, and strike a balance between encouraging saving for retirement and creditors’ rights for reimbursement. The changes will apply to superannuation contributions made after July 27, 2006.
The Association of Superannuation Funds of Australia (ASFA) was a key group in the consultation process. While expressing satisfaction with the measures, ASFA noted that it had been a long and arduous process. “The outcome is good — superannuation trustees don’t have to deal with the administrative complexities [involved in ‘clawback’ proceedings]. They’ve taken on board a lot of the issues we raised about not making it overly difficult,” said Michaela Anderson, ASFA director of policy and research. But she said that it had been a slow undertaking that was possibly “much more complicated than necessary”.
