Superannuation is puzzling enough, let alone when you need to worry about Bankruptcy also. At Bankruptcy Experts Albury we often have a lot of people questioning us about what can take place to their super, and if you have a regulated or industry fund (like most superfunds) then your super is secure, and Bankruptcy will have no effect upon your super. Nonetheless, if you have a Self-Managed Super Fund then you might find some troubles because there are certain things you can not do while insolvent surrounding the management of finances.

This is really an increasing 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 happens to these Superfunds when it comes down to Bankruptcy?

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

Firstly, if you are taking into account Bankruptcy, you can not be a part of a SMSF. Why? Considering that if you are going up against insolvency, you will be grouped as a ‘disqualified person’. And a disqualified individual can not operate as an Individual Trustee. This leads to a complication because typically most of the SMSFs are just 2 individuals, which implies both 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 advise 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 bankruptcy can be rather harmful to a SMSF and as you can envision the procedure of Bankruptcy for a SMSF is rather intricate.

Regardless 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 fact because Bankruptcy is so complex with SMSFs we encourage you to get both legal and financial assistance before proceeding with any of the decisions suggested within this article.

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

For starters, the SMSF will need to be restructured. This means that you will certainly want to consider your entire structure and ensure it is meeting the basic conditions, including aspects like maintaining a new trustee that is not dealing with problems with Bankruptcy. The Australian Tax office will provide you a 6 month ‘grace period’ to get this completed before you face punishments. And consider, often the most ideal plan would certainly be to simply roll the fund into an industry or corporate fund.

Beyond these large-scale restructuring problems, there is a lot of paperwork to handle too, and you need to be continually keeping the ATO updated of what is occurring. 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 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.

Throughout that 6 month time frame 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 Albury for some complimentary guidance on 1300 795 575.

What happens 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 varied as you will need to designate a new director (as it can not be you from now on) you are going to need to make a great deal of tough choices with this so consulting with a professional is going to be necessary. You can easily get in touch with Bankruptcy Experts Albury 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 taking care of concerns, it can affect 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 meeting the ATO needs.

Bankruptcy is certainly never uncomplicated, but getting correct guidance is the very best initial step. If you wish to talk about your options further, contact us at Bankruptcy Experts Albury or visit our website: or just call us on 1300 795 575.