Superannuation is perplexing enough, not to mention when you have to stress over Bankruptcy also. At Bankruptcy Experts Rockhampton we often have individuals asking 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 safe, and Bankruptcy will have no impact upon your super. However, if you possess a Self-Managed Super Fund then you could find some concerns because there are certain things you can not do whilst bankrupt 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 increased 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 suggested previously, a fundamental option to your SMSF issue is to put your super back into a normal regulated managed fund prior to personal bankruptcy and save yourself all the issues outlined above.

First and foremost, if you are considering 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 function as an Individual Trustee. This leads to a challenge because usually 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 lot of legal rules, and if you are in this position I would highly urge you to be familiar with them all– for instance the fact that you can not ‘know or suspect’ that one of you are bankrupt. So you can notice how an individual bankruptcy could be quite harmful to a SMSF and as you can imagine the process of Bankruptcy for a SMSF is rather intricate.

Irrespective if you call us or somebody else it does not matter, just please don’t step into insolvency blind when it relates to your SMSF. In fact because Bankruptcy is so complicated with SMSFs we urge you to get both legal and financial assistance before proceeding with any of the actions indicated within this short article.

So what takes place 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 wish to consider your whole structure and make sure it is complying with the basic rules, including aspects like having a new trustee that is not coping with problems with Personal bankruptcy. The Australian Tax office will provide you a 6 month ‘grace period’ in order to get this accomplished before you face penalties. And take into consideration, sometimes the most ideal plan would certainly be to simply roll the fund into an industry or corporate fund.

More than these large-scale restructuring issues, there is a huge amount of paperwork to deal with too, and you need to be continually keeping the ATO updated of what is happening. This shows you need to let them know that you have a bankruptcy problem 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 update 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 have to remove the Bankrupt from the SMSF– including their property and assets. Keep in mind if you are uncertain call Bankruptcy Experts Rockhampton 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 can be a little bit varied as you will need to designate a new director (as it can not be you anymore) you are going to need to make a great deal of difficult selections with this and so consulting with a specialist is going to be essential. You can easily phone Bankruptcy Experts Rockhampton for some free advice on 1300 795 575.

From that you can discover how whenever it comes to Bankruptcy, even though one single member is dealing with troubles, 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, please get financial advice to make sure you are fulfilling the ATO needs.

Bankruptcy is certainly never simple, but getting correct advice is the very best first step. If you want to discuss your options further, give us a call at Bankruptcy Experts Rockhampton or visit our website: or just call us on 1300 795 575.