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Whose Child is it Anyway?

Lawyers Weekly
Issue 392, Friday 20 June 2008

Maged Girgis Nathan Hodge




The Federal Government is set to follow its election promise to remove discrimination against same-sex couples in superannuation law with the introduction into the House of Representatives of the Same-Sex Relationships (Equal Treatment Commonwealth Laws - Superannuation) Bill 2008 (the Bill) on 28 May 2008.

The passage of this reform effectively commenced 10 years ago with the introduction of the Superannuation (Entitlements of same-sex couples) Bill in 1998. However, that Bill was not read for a second time until almost a year after it was introduced.

The Bill was not debated and was subsequently removed from consideration by the House of Representatives on 14 October 1999. Attempts over the last 10 years to pass a number of subsequent Bills containing similar amendments have also been unseccessful. However, following the change in Federal Government in late 2007, same-sex superannuation reforms have been revived with the introduction of the current Bill.

If passed, the Bill will amend the Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act) with effect from 1 July 2008 so that same-sex couples will no longer need to establish financial dependency, or interdependency, in order to be entitled to their partner's death benefits (or tax concessions on those benefits). Similarly, the biological or birth child of one parent in the same-sex relationship may also have an entitlement to the death benefits of the parent's partner.

Currently, the SIS Act essentially only permits payment of death benefits from a superannuation fund directly to family members (through the limited definitions of "spouse" and "child"), financial dependants, inter-dependants and the estate of the deceased. A same-sex partner is not currently considered a family member of the deceased member and the meber's death benefit can be paid directly to a same-sex partner only if he or she qualifies as a financial dependant or as an interdependant.

One practical effect of this is that same-sex partners generally have to supply superannuation funds with significantly more private details about the nature of their relationship with the deceased (as compared with the information that must be provided by a married or opposite sex de-facto spouse) before an entitlement to the death benefit can be determined.

The Bill represents a significant step towards recognising same-sex partners as family members. It will do this by expanding the definition of "spouse" in the SIS Act to include any other person who, although not legally married to the person, lives with the person on a genuine domestic basis in a "relationship as a couple" (whether they are the same-sex or different sexes). The proposed definition now clearyl includes married couples, de facto couples and same-sex couples.

The Bill will also amend the definition of "child" to include a child of a person's relationship as a couple. Currently, the SIS Act recognises the biological child of both members of a married couple or an opposite sex de-facto couple as being the child of both members of that couple.

If either of the members of that couple dies, the child automatically qualifies as a family member and, therefore, a dependant of the deceased. This entitles the child to be considered for payment of some or all of the death benefit payable from the parent's superannuation fund.

However, the SIS Act does not recognise a child of a same-sex couple as the child of both members of that couple in the same way that is does of a married couple or an opposite sex de-facto couple. While the SIS Act recognises the child's relationship with the biological mother or father, it does not currently recognise the child's relationship with the mother's or father's same-sex partner.

The Bill attempts to address this by including as a person's child any child who is a product of the person's relationship as a couple with another person (whether that couple are the same-sex or different sexes).

However, the definition is subject to the proviso that the child must be either the biological child of at least one of the persons in the relationship or born to a woman in the relationship.

While the concept seems relatively straightforward, the legislative drafting is somewhat problematic. In particular, the concept of a child as a "product" of a relationship is not defined and must be gleaned from the Bill. Perhaps it was the intention of the drafters that the legislation remain flexible and undefined, however, this creates uncertainty where situations outside the norm arise.

The Explanatory Memorandum sets out a number of examples where a child is the product of a relationship. Examples 1 and 2 involve a same-sex relationship between J (a member of the superannuation fund) and S, where both agree that S gives birth to a child, H, conceived through artificial conception procedures.

In Example 1, H, is conceived with gametes of S and, in Example 2, H is conceived using donated gametes. In both cases, H is considered to be the child of S; and in Example 2, by H being the birth child of S.

However, in each case, H is also considered to be the child of J, because H is the product of the relationship being in place - after all, the Bill clearly contemplates that a child from a person's previous relationship will not be considered to be the child of the person's partner (unless the child is a step-child or adopted child).

It is also submitted there must be a causal link between the child being conceived and the relationship being in place. That is, the child must be a product of the actions or decisions of the couple to add a child to their relationship.

However, even with the imposition of these criteria, there remains uncertainty. To what extent should the joint caring for, and raising of, a child determine whether the child is a product of the relationship?

Or it is only a matter of the couples' intention? For instance, if a couple do not agree to the addition of a child to their relationship but a child is born to a woman in the relationship, is the child considered to be the child of the mother's partner as the product of their relationship with the mother?

The situations in which it is perhaps most unclear involve male-male same-sex couples. Is the child the product of the relationship if there is a third party who not only gave birth to the child but also took partial or full responsibility for care and raising the child?

Would the answer be different if the child was conceived using the gametes of one of the male same-sex partners? If the child's biological or birth mother is also in a relationship of her own, could the child be considered to be the product of both relationships?

Importantly, the proposed changes do not apply only to same-sex couples but also effectively extend who is considered a person's child in a married or an opposite sex de-facto couple. As a result, it would not be difficult to imagine situations (such a child born as a result of a sexual assault) that test the bounds of the definitions proposed by the Bill.

Further, it is not clear what evidence a superannuation trustee would need to gather in order to be satisfied that a child was a "product" of a same-sex relationship

While the Bill is designed to bring equality to death benefit payments, it should be remembered that the terms "spouse" and "child" are used throughout the SIS Act. The amendments to the definitions of "spouse" and "child" will not only impact on death benefit paymentrs but will also affect other less obvious provisions in the SIS Act.

For example, the amendments will expand the category of people that can take advantage of contribution splitting as well as those will be caught by the related party provisions of the in-house asset rules, to include same-sex partners.

However, anomalously, the Bill will not amend the definition of "relative" in the SIS Act which is used in provisions such as the prohibition against lending to members. A "relative" will continue to be defined to include a spouse, adopted child or lineal descendant. Accordinly, the expanded definition of "spouse" would apply, however, the expanded definition of "child" would not.

The Bill also contains similar amendments to the tax law. However, these amendments would apply only for the 2008-2009 year, with further amendments to be phased in with later legislation. They do not impact other provisions regarding spouses, such as tax offset provisions for spouse contributions - the government proposes to introduce further amendments to the tax law with later legislation.

In short, these reforms raise significant issues for superannuation trustees and for the wider community, both in understanding the full effect of these changes and implementing them.

(Lawyers Weekly Issue 392, Friday 20 June 2008, page 14 - Magis Girgis and Nathan Hodge