Contribution from offenders: Proposed legislative changes to access their superannuation

In brief 

Federal legislative changes are currently proposed to assist victims with obtaining contributions from offenders who shield their assets within superannuation funds. 

Present status and proposed changes

Presently, there are three avenues for a victim of a crime to seek compensation from an offender or alleged offender of a crime: 

1. State and territory compensation schemes; where the state or territory pays compensation directly to a victim of a crime and for which a state or territory may seek reimbursement from an offender; 

2. Compensation or Reparation Orders; which are made as part of the sentencing process in criminal proceedings - requiring an offender to pay the victim; and 

3. Civil orders for damages; which are made against an offender or alleged offender for damages requiring them to pay the victim. 

Across all three avenues, an offender's superannuation assets are not available to satisfy any award of compensation because superannuation assets are legislatively protected from being accessed, except in special circumstances - which presently does not include the above avenues. 

There is a very real concern that offenders, in anticipation of an award of compensation being made against them, are presently incentivised to voluntarily make a large personal contribution to their superannuation fund, or their spouse's superannuation fund, to shield their personal assets from victims, or institutions, who are benefiting from compensation orders. 

On 19 January 2023, the Federal Treasury released a discussion paper proposing 2 legislative reforms to address this legal loophole, being: 

First reform proposal (accessing superannuation for unpaid compensation orders): is to disincentivise voluntary additional payments made by an offender to their superannuation fund. Where a victim has an unpaid, or partially paid compensation order from the Court for 12 months or more, they would be able to apply for an order from the Court requiring the release of monies from the offender's, or their spouse's, superannuation. 

The ATO, through the Commissioner of Taxation, would facilitate the release of any voluntary 'additional monies' that were deemed eligible for release. Eligibility of these funds would be determined by an analysis of a 6 - 12 month 'deeming' period before the offender was charged. 

Importantly, it is proposed that this order will only apply to offenders who have been criminally convicted for a 'child sexual abuse offence' outlined within Section 3 of the Crimes Act 1914 and in Division 270-271 of the Criminal Code. This means it will not apply to alleged offenders who have not been subject to criminal proceedings regarding the victim's allegations or have been criminally charged for other offences. 

Second reform proposal (providing visibility of superannuation accounts): is to assist victims in considering whether they should commence legal proceedings to seek an order and obtain compensation under the first reform proposal and to grant additional forensic investigation powers to the Court to assist with the visibility of an offender's superannuation assets. 

The proposal is that, before undertaking legal proceedings to access an offender's superannuation, victims would have the option of submitting a superannuation information request form to the Court to ascertain the total value of any 'additional' superannuation contributions made by the offender during the deeming period. 

The Court would submit a request to the ATO on the victim's behalf and then subsequently provide this information to the parties to any proceedings. If a spouse's information is sought, both the offender and the spouse would need to be joined as a party to the proceedings. 

Current legislative status

The Treasury sought feedback on its proposals, which closed on 16 February 2023. Key submissions were made by the Law Council of Australia, with contributions from the Law Institute of VIC, the Law Societies of the ACT, NSW, QLD and SA and the Victorian Bar, who argued that:

• The proposals should apply to alleged offenders who have not been criminally convicted given the traumatic process of criminal proceedings for a victim

• The proposals should extend beyond victims of child sexual abuse and also apply to other serious crimes

• The deeming period of accessible funds applying 6 - 12 months before proceedings is unjustifiably narrow and arbitrary and the period should commence upon the offender's notice of an allegation made against them or allowing the Court discretion for removing the deeming period altogether

• The definition of what is an 'additional' contribution and caught within the scope of the accessible funds to a victim needs broadening and further consideration given the complexities of superannuation contributions. 

We understand that the Federal Government intends to introduce draft legislation to Parliament in 2023. However, there does not appear to have been progress since the closure of submissions in February. 

Implications for institutions 

As settlement sums increase in civil claims, contributions from any parties are a key consideration for all institutions and their insurers. 

As it presently stands, seeking contribution from an offender is a difficult process for an institution or claimant and these proposals offer a potential benefit in the limited circumstances where an offender has been criminally charged in relation to the allegations.  

We will continue to monitor these developments carefully given the significant implications for institutions across Australia.