Bankruptcy and Superannuation.


Superannuation is perplexing enough, let alone when you should think about Bankruptcy too. At Bankruptcy Experts Toowoomba we frequently have people asking us about what may take place 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 impact upon your super. However, if you have a Self-Managed Super Fund then you may find some concerns because there are various things you can not do while insolvent related to 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 developed 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 issue is to put your super back into a standard regulated managed fund before insolvency and save yourself all the problems described above.

First and foremost, if you are taking into consideration 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 operate as an Individual Trustee. This leads to a problem because normally most of the SMSFs are just 2 individuals, which means the two 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 urge you to become aware of them all– as an example the fact that you can not ‘know or suspect’ that one of you are insolvent. Therefore, you can observe how an individual insolvency could be rather harmful to a SMSF and as you can envision the procedure of Bankruptcy for a SMSF is rather complicated.

Irrespective if you contact us or somebody else it does not matter, just please do not walk into bankruptcy blind when it relates to your SMSF. In fact because Bankruptcy is so complex with SMSFs we encourage you to get both legal and financial recommendations before proceeding with any of the actions suggested 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 restructured. This means that you will certainly want to consider your entire structure and make sure it is complying with the basic rules, consisting of aspects like maintaining a new trustee that is not coping with issues with Bankruptcy. The Australian Tax office will offer you a 6 month ‘grace period’ to get this accomplished before you face punishments. And take into consideration, often the most optimal plan would certainly be to just roll the fund into an industry or corporate fund.

More than these large-scale restructuring problems, there is a great deal of paperwork to handle too, and you have to be continuously keeping the ATO updated of what is occurring. This indicates you have to let them know that you have a bankruptcy issue with your current trustee, that they are being eliminated as soon as possible and let them know who the new trustee/director is. The Insolvent will likewise have to notify the ATO using the form NAT 3036 (Found on the ATO website) and they need to also notify ASIC of their resignation.

Throughout that 6 month time period you will need to remove the Bankrupt from the SMSF– including their property and assets. Just remember if you are not sure call Bankruptcy Experts Toowoomba for some complimentary guidance 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 be a little bit varied as you will want to designate a new director (since it can not be you from now on) you are going to need to make a great deal of tough decisions with this therefore consulting with a professional is going to be very important. You can contact Bankruptcy Experts Toowoomba for some free advice on 1300 795 575.

From that you can notice how whenever it comes to Bankruptcy, although one single member is handling concerns, it can impact the very existence of an SMSF. If you are at this moment facing this issue yourself, or with a partner in a SMSF, feel free to seek financial advice to make sure you are satisfying the ATO needs.

Bankruptcy is never easy, but getting appropriate suggestions is the best first step. If you wish to go over your options further, contact us at Bankruptcy Experts Toowoomba or visit our website: or just call us on 1300 795 575.

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