Bankruptcy and Superannuation.


Bankruptcy and Superannuation.

Superannuation is confusing enough, not to mention when you need to think about Bankruptcy also. At Bankruptcy Experts Bunbury 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 secure, and Bankruptcy will likely have no impact upon your super. Nonetheless, if you possess a Self-Managed Super Fund then you could discover some troubles because there are various things you can not do when insolvent related to the management of finances.

This is really a growing concern with a number of Australians in the last few years; the ATO tells 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 boils down to Bankruptcy?


As I recommended previously, a basic option to your SMSF problem is to put your super back into a standard regulated managed fund before personal bankruptcy and save yourself all the issues outlined above.

Firstly, if you are thinking about Bankruptcy, you can not be a part of a SMSF. Why? Because if you are confronting bankruptcy, you will be grouped as a ‘disqualified person’. And a disqualified person can not operate as an Individual Trustee. This leads to a problem because typically most of the SMSFs are just 2 individuals, which implies the two of these users must also be the individual trustees. The position of trustee sets a bunch of legal rules, and if you are in this position I would strongly urge you to become familiar with them all– as an example the fact that you can not ‘know or suspect’ that one of you are bankrupt. So you can observe how an individual insolvency could be quite harmful to a SMSF and as you can imagine the process of Bankruptcy for a SMSF is rather convoluted.

Irrespective if you phone us or somebody else it does not matter, just please don’t walk into bankruptcy blind when it concerns your SMSF. In fact because Bankruptcy is so complicated with SMSFs we encourage you to get both legal and financial advice before proceeding with any one of the decisions pointed out within this short article.

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

For starters, the SMSF will want to be reorganized. This means that you will certainly wish to think about your whole structure and ensure it is satisfying the basic terms, incorporating aspects like maintaining a new trustee that is not coping with problems with Insolvency. The Australian Tax office will provide you a 6 month ‘grace period’ to get this accomplished before you face punishments. And take into consideration, in some cases the most optimal strategy would certainly be to simply roll the fund into an industry or corporate fund.

More than these large-scale restructuring matters, there is a lot of paperwork to cope with too, and you need to be continually keeping the ATO notified of what is taking place. This suggests 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 also have to update the ATO using the form NAT 3036 (Found on the ATO website) and they need to also notify ASIC of their resignation.

During that 6 month period of time you will need to remove the Bankrupt from the SMSF– including their property and assets. Keep in mind if you are uncertain call Bankruptcy Experts Bunbury for some complimentary recommendations on 1300 795 575.

What happens if I use a single member fund?

However, if you are a single member fund the Bankruptcy can be a bit different because you will need to designate a new director (because it can not be you from now on) you are going to need to make a great deal of tough selections with this therefore consulting with a professional is going to be essential. You can easily get in touch with Bankruptcy Experts Bunbury for some free guidance on 1300 795 575.

From that you can discover how when it involves Bankruptcy, even though one single member is dealing with troubles, it can have an effect on the very existence of an SMSF. If you are at this point facing this concern yourself, or with a partner in a SMSF, please seek financial advice to make sure you are meeting the ATO requirements.

Bankruptcy is certainly never easy, but finding appropriate suggestions is the very best first step. If you would like to talk about your options further, contact us at Bankruptcy Experts Bunbury or visit our website: or just call us on 1300 795 575.

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