Bankruptcy and Superannuation.

Bankruptcy and Superannuation.

Superannuation is perplexing enough, let alone when you have to worry about Bankruptcy as well. At Bankruptcy Experts Tablelands we frequently have a lot of people talking to us about what will happen to their super, and if you possess a regulated or industry fund (like most superfunds) then your super is safe, and Bankruptcy will have no effect upon your super. Having said that, if you possess a Self-Managed Super Fund then you could discover some problems because there are various things you can not do whilst bankrupt surrounding the management of finances.

This is actually a growing concern with a lot of Australians in the last few years; the ATO informs us it has grown Australia-wide from 758,589 in 2009 to 1,011,689 in 2014. So what occurs to these Superfunds when it comes down to Bankruptcy?

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

Firstly, if you are thinking about Bankruptcy, you can not be a part of a SMSF. Why? Considering that if you are confronting bankruptcy, you will be grouped as a ‘disqualified person’. And a disqualified person can not function as an Individual Trustee. This poses a problem because generally most of the SMSFs are just 2 individuals, which implies both of these users must also be the individual trustees. The position of trustee sets a bunch of legal guidelines, and if you are in this position I would highly advise you to be aware of them all– as an example because you can not ‘know or suspect’ that one of you are bankrupt. So you can notice how an individual insolvency could be quite damaging to a SMSF and as you can imagine the process of Bankruptcy for a SMSF is rather intricate.

Irrespective if you contact us or somebody else it does not matter, just please don’t step into insolvency blind when it comes to your SMSF. In reality because Bankruptcy is so complicated with SMSFs we encourage you to get both legal and financial assistance before proceeding with any of the decisions pointed out in this post.

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

For starters, the SMSF will want to be restructured. This means that you will certainly wish to take into consideration your entire structure and make certain it is satisfying the basic rules, consisting of points like maintaining a new trustee that is not coping with problems with Personal bankruptcy. The Australian Tax office will offer you a 6 month ‘grace period’ in order to get this accomplished before you face penalties. And take into consideration, in some cases the most optimal strategy 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 constantly keeping the ATO informed of what is happening. This shows you have to let them know that you have a bankruptcy issue with your current trustee, that they are being eliminated as quickly as possible and let them know who the new trustee/director is. The Bankrupt will additionally need to inform the ATO using the form NAT 3036 (Found on the ATO website) and they have 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. Bear in mind if you are uncertain call Bankruptcy Experts Tablelands for some free suggestions 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 bit different as you will be required to appoint a new director (as it can not be you any longer) you will need to make a lot of hard choices with this and so consulting with a specialist is going to be important. You can easily phone Bankruptcy Experts Tablelands for some free assistance on 1300 795 575.

From that you can notice how whenever it comes to Bankruptcy, although one single member is taking care of troubles, it can have an effect on the very existence of an SMSF. If you are at this moment facing this matter yourself, or with a partner in a SMSF, feel free to seek financial advice to make sure you are fulfilling the ATO requirements.

Bankruptcy is never uncomplicated, but finding proper advice is the most effective initial step. If you want to discuss your choices further, contact us at Bankruptcy Experts Tablelands or visit our website: or just call us on 1300 795 575.