Superannuation is puzzling enough, not to mention when you have to stress over Bankruptcy also. At Bankruptcy Experts Maitland we frequently have a lot of people 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 secure, and Bankruptcy will likely have no influence upon your super. However, if you have a Self-Managed Super Fund then you might get some troubles because there are certain things you can not do when bankrupt surrounding the management of finances.
This is really 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?
As I proposed earlier, a basic solution to your SMSF problem is to put your super back into a standard regulated managed fund before 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 operate as an Individual Trustee. This leads to a challenge because generally most of the SMSFs are just 2 people, which implies the two of these members 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 highly urge you to become familiar with them all– as an example because you can not ‘know or suspect’ that one of you are bankrupt. So you can notice how an individual insolvency can be somewhat harmful to a SMSF and as you can picture the process of Bankruptcy for a SMSF is somewhat intricate.
Regardless if you contact us or somebody else it does not matter, just please don’t walk into bankruptcy blind when it comes to your SMSF. In fact because Bankruptcy is so complex with SMSFs we urge you to get both legal and financial assistance before proceeding with any one of the steps suggested within this post.
So what occurs if one of the members of an SMSF does enter Bankruptcy?
For starters, the SMSF will want to be reorganized. This means that you will wish to consider your whole structure and make certain it is meeting the basic terms, including aspects like maintaining a new trustee that is not coping with problems with Bankruptcy. The Australian Tax office will provide you a 6 month ‘grace period’ in order to get this accomplished before you face penalties. And consider, often the most optimal strategy would certainly be to just roll the fund into an industry or corporate fund.
Beyond these large-scale restructuring issues, there is a lot of paperwork to deal with too, and you need to be constantly keeping the ATO updated of what is taking place. This suggests you need 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 Bankrupt will also 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.
In the course of that 6 month time frame you will need to remove the Bankrupt from the SMSF– including their property and assets. Remember if you are uncertain call Bankruptcy Experts Maitland for some complimentary suggestions on 1300 795 575.
What happens if I use a single member fund?
However, if you are a single member fund the Bankruptcy will certainly be a bit different as you will be required to appoint a new director (because it can not be you from now on) you will need to make a lot of hard decisions with this so consulting with a professional is going to be very important. You can phone Bankruptcy Experts Maitland for some free guidance on 1300 795 575.
From that you can notice how whenever it involves Bankruptcy, although one single member is managing troubles, it can influence the very existence of an SMSF. If you are at this point facing this issue yourself, or with a partner in a SMSF, please get financial advice to make sure you are meeting the ATO demands.
Bankruptcy is never easy, but getting proper recommendations is the very best first step. If you would like to discuss your options further, contact us at Bankruptcy Experts Maitland or visit our website: www.bankruptcyexpertsmaitland.com.au or just call us on 1300 795 575.