Superannuation is perplexing enough, let alone when you have to worry about Bankruptcy as well. At Bankruptcy Experts Port Stephens we frequently have a lot of people asking us about what may occur 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 influence upon your super. Nonetheless, if you possess a Self-Managed Super Fund then you might get some issues because there are a number of things you can not do when bankrupt surrounding the management of finances.

This is actually a growing 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 comes down to Bankruptcy?

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As I proposed previously, a basic solution to your SMSF concern is to put your super back into a normal regulated managed fund before insolvency and save yourself all the issues 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 insolvency, you will be grouped as a ‘disqualified person’. And a disqualified individual can not operate as an Individual Trustee. This poses a problem because typically most of the SMSFs are just 2 individuals, which implies both of these members must also be the individual trustees. The position of trustee sets a lot of legal guidelines, and if you are in this position I would strongly advise you to be familiar with them all– as an example because you can not ‘know or suspect’ that one of you are insolvent. Therefore, you can notice how an individual insolvency can be somewhat harmful to a SMSF and as you can envision the process of Bankruptcy for a SMSF is rather complicated.

Regardless if you contact us or somebody else it does not matter, just please don’t walk into insolvency blind when it comes to your SMSF. In reality because Bankruptcy is so complex with SMSFs we urge you to get both legal and financial recommendations before proceeding with any one of the actions 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 restructured. This means that you will certainly wish to consider your whole structure and ensure it is satisfying the basic requirements, consisting of things like maintaining a new trustee that is not coping with problems with Personal bankruptcy. The Australian Tax office will offer you a 6 month ‘grace period’ in order to get this accomplished before you face penalties. And take into consideration, sometimes the most optimal strategy would certainly be to just roll the fund into an industry or corporate fund.

More than these large-scale restructuring troubles, there is a great deal of paperwork to handle too, and you need to be constantly keeping the ATO notified of what is happening. 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 Insolvent will also need to inform 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 Port Stephens for some complimentary 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 will be a bit varied as you will be required to designate a new director (since it can not be you anymore) you are going to need to make a great deal of tough decisions with this and so consulting with a professional is going to be vital. You can easily get in touch with Bankruptcy Experts Port Stephens for some free advice on 1300 795 575.

From that you can acknowledge how whenever it comes to Bankruptcy, despite the fact that one single member is handling problems, it can affect the very existence of an SMSF. If you are at this moment facing this concern yourself, or with a partner in a SMSF, feel free to seek financial advice to make sure you are satisfying the ATO requirements.

Bankruptcy is never uncomplicated, but finding proper recommendations is the very best first step. If you wish to talk about your options further, contact us at Bankruptcy Experts Port Stephens or visit our website: or just call us on 1300 795 575.

Bankruptcy and Superannuation.