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Bankruptcy and Superannuation.

Superannuation is puzzling enough, let alone when you have to think about Bankruptcy as well. At Bankruptcy Experts Canberra we often have a lot of people talking to us about what can occur to their super, and if you have a regulated or industry fund (like most superfunds) then your super is safe, and Bankruptcy will likely have no influence upon your super. Having said that, if you possess a Self-Managed Super Fund then you might get some problems because there are certain things you can not do while insolvent related to the management of finances.

This is actually an increasing concern with a number of Australians in the last few years; the ATO tells us it has increased Australia-wide from 758,589 in 2009 to 1,011,689 in 2014. So what happens to these Superfunds when it boils down to Bankruptcy?

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As I proposed previously, a basic solution to your SMSF problem is to put your super back into a typical regulated managed fund before personal bankruptcy and save yourself all the complications outlined above.

First and foremost, if you are thinking about Bankruptcy, you can not be a part of a SMSF. Why? Considering that if you are confronting insolvency, you will be grouped as a ‘disqualified person’. And a disqualified person can not function as an Individual Trustee. This poses a complication because usually most of the SMSFs are just 2 people, which implies the two of these participants must also be the individual trustees. The position of trustee sets a lot of legal guidelines, and if you are in this position I would highly urge you to be acquainted with them all– for example the fact that you can not ‘know or suspect’ that one of you are bankrupt. Therefore, you can notice how an individual insolvency can be quite harmful to a SMSF and as you can envision the process of Bankruptcy for a SMSF is somewhat intricate.

Regardless if you contact us or somebody else it does not matter, just please do not step into bankruptcy blind when it concerns your SMSF. In fact because Bankruptcy is so complex with SMSFs we urge you to get both legal and financial assistance before proceeding with any of the steps indicated within this short article.

So what occurs if one of the members of an SMSF does enter Bankruptcy?

For starters, the SMSF will need to be reorganized. This means that you will want to think about your entire structure and make sure it is satisfying the basic requirements, incorporating points like having a new trustee that is not dealing with issues with Bankruptcy. The Australian Tax office will provide you a 6 month ‘grace period’ in order to get this completed before you face punishments. And take into consideration, sometimes the most optimal plan would be to simply roll the fund into an industry or corporate fund.

More than these large-scale restructuring problems, there is a huge amount of paperwork to take care of too, and you have to be continuously keeping the ATO notified of what is taking place. This indicates you need to let them know that you have a bankruptcy problem with your current trustee, that they are being removed as soon as possible and let them know who the new trustee/director is. The Insolvent will additionally have to notify the ATO using the form NAT 3036 (Found on the ATO website) and they will need to also notify ASIC of their resignation.

In the course of that 6 month period of time you will have to remove the Bankrupt from the SMSF– including their property and assets. Just remember if you are not sure call Bankruptcy Experts Canberra for some complimentary recommendations on 1300 795 575.

What if I use a single member fund?

On the other hand, if you are a single member fund the Bankruptcy will certainly be a little bit diverse since you will want to appoint a new director (simply because it can not be you anymore) you are going to need to make a great deal of hard selections with this so speaking to a specialist is going to be important. You can easily call Bankruptcy Experts Canberra for some free assistance on 1300 795 575.

From that you can acknowledge how when it involves Bankruptcy, despite the fact that one single member is handling problems, it can have an effect on the very existence of an SMSF. If you are at this point facing this matter yourself, or with a partner in a SMSF, please seek financial advice to make sure you are meeting the ATO needs.

Bankruptcy is certainly never uncomplicated, but finding appropriate advice is the best initial step. If you want to go over your choices further, contact us at Bankruptcy Experts Canberra or visit our website: or just call us on 1300 795 575.