This article provides a brief overview of relationship property and the difference between the legislation in Australia and New Zealand, written by our Kim Crosby who has practiced in both jurisdictions.
Over the Ditch; A Four-Step Process
Like us, Australia is a Commonwealth country. Their family law system is a federal system and does not differ from State to State. The Family Law Act 1975 together with case law governs relationship property matters in Australia. The act applies, with few exceptions, if you are married, in a civil union or have been in a de facto relationship for 2 or more years (so one year less than our jurisdiction).
A four-step process is used to consider relationship property matters in Australia. Those steps are:
Identify and value the assets, liabilities and financial resources of the parties (the ‘property pool’);
Consider the contributions of the parties made throughout the relationship (including financial (i.e income) or non-financial (i.e. role as a homemaker or parent);
Consider the future needs of each party (including income earning capacity, age, care of children etc); and
Determine a just and equitable property settlement (the complicated part).
It can be difficult to advise during any stage of the four-step process. In particular where parties have complex financial structures, an interest in a company, business or trust. As you would imagine, sometimes all four steps can be litigious, or just one.
In some cases, a property settlement may not be just and equitable in having regard to all the circumstances and therefore no division of relationship property need occur.
Meanwhile, in New Zealand…
We got practical about relationship property from the outset. The Property (Relationships) Act 1976 (“PRA”) makes it clear that if parties are in a de facto relationship or married for more than three years, in the event of a separation the relationship property is to be divided equally between the parties.
There are, however, some exceptions to equal sharing including where a party had ‘separate property’ at the commencement of the relationship that was kept separate during the relationship.
Other exceptions to the rule of equal sharing are when a relationship ends is if the income and living standards of one party are likely to be significantly higher than the other because of the effects of the division of functions within the relationship while the parties were living together.
In extraordinary circumstances that make equal sharing of property or money repugnant to justice, the share of each party in that property or money is to be determined in accordance with the contribution of each party.
The PRA is currently under review so we will keep you posted when we know more!
But what if I have relationship property in Australia and New Zealand?
New Zealand jurisdiction can only deal with moveable property in Australia (such as bank accounts or Superannuation). A house for example would be considered immovable property. Additional considerations may be:
Superannuation- can it be withdrawn as cash or does it need to be transferred to another Superannuation account? What is the true value and how can the value be determined (for example many Australian superfunds require formal valuations).
Real property and possible associated taxes if they were to be sold (i.e. Capital Gains Tax (AU) or Bright Line Legislation (NZ));
Income Tax implications- which country are you a resident of for tax purposes.
If you need to determine your relationship property and have assets in both countries it’s always advisable to obtain legal advice (and accounting advice, if necessary) from practitioners in NZ and practitioners in Australia. In some circumstances, you may need to consult a solicitor in a relevant state in Australia (i.e in relation to real property). Careful consideration may need to be given in relation to how the division can be legally enforceable in both countries. We are able to provide you with referrals to family law practitioners in all States of Australia.
For more information on separation and division of relationship property see our other articles linked here:
- But we were only together for a hot minute! - Relationships of short duration (less than 3 years)
- What is disclosure and why do I have to share it?
By Kim Crosby | Solicitor
The information contained in this article is provided for informational purposes only and should not be construed as legal advice on any subject matter.
