Bankruptcy and Superannuation.

Superannuation is confusing enough, not to mention when you should worry about Bankruptcy as well. At Bankruptcy Experts Sydney we often have a lot of people questioning us about what will take place to their super, and if you possess a regulated or industry fund (like most superfunds) then your super is safe, and Bankruptcy will likely have no influence upon your super. Nonetheless, if you have a Self-Managed Super Fund then you might discover some problems because there are various things you can not do while bankrupt related to the management of finances.

This is actually an increasing 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 boils down to Bankruptcy?

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As I recommended previously, a basic solution to your SMSF issue is to put your super back into a typical regulated managed fund prior to going bankrupt and save yourself all the problems described above.

Firstly, if you are thinking about Bankruptcy, you can not be a part of a SMSF. Why? Considering that if you are confronting personal bankruptcy, you will be grouped as a ‘disqualified person’. And a disqualified person can not operate as an Individual Trustee. This poses a challenge because normally most of the SMSFs are just 2 people, which means the two of these participants must also be the individual trustees. The position of trustee sets a great deal of legal guidelines, and if you are in this position I would strongly urge you to become acquainted with them all– as an example the fact that you can not ‘know or suspect’ that one of you are insolvent. Therefore, you can notice how an individual insolvency can be quite damaging to a SMSF and as you can picture the process of Bankruptcy for a SMSF is somewhat complicated.

Regardless if you contact us or somebody else it does not matter, just please don’t step into bankruptcy blind when it relates 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 one of the decisions indicated within this post.

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

For starters, the SMSF will need to be restructured. This means that you will wish to consider your whole structure and make certain it is satisfying the basic conditions, consisting of things like having a new trustee that is not dealing with problems with Insolvency. The Australian Tax office will offer you a 6 month ‘grace period’ in order to get this done before you face punishments. And take into consideration, sometimes the most optimal plan would certainly be to just roll the fund into an industry or corporate fund.

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

Throughout that 6 month duration you will need to remove the Bankrupt from the SMSF– including their property and assets. Just remember if you are uncertain call Bankruptcy Experts Sydney for some free suggestions on 1300 795 575.

What if I use a single member fund?

However, if you are a single member fund the Bankruptcy will certainly be a bit different because you will want to appoint a new director (since it can not be you anymore) you are going to need to make a great deal of tough selections with this therefore consulting with a professional is going to be very important. You can easily contact Bankruptcy Experts Sydney for some free guidance on 1300 795 575.

From that you can discover how when it comes to Bankruptcy, despite the fact that one single member is handling issues, it can have an effect on the very existence of an SMSF. If you are at this moment facing this issue yourself, or with a partner in a SMSF, please get financial advice to make sure you are fulfilling the ATO needs.

Bankruptcy is never uncomplicated, but finding appropriate advice is the very best initial step. If you would like to discuss your choices further, contact us at Bankruptcy Experts Sydney or visit our website: or just call us on 1300 795 575.