Bankruptcy and Superannuation.

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Bankruptcy and Superannuation.

Superannuation is perplexing enough, not to mention when you should worry about Bankruptcy also. At Bankruptcy Experts Mackay we often have individuals talking to us about what will 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 influence upon your super. Nonetheless, if you possess a Self-Managed Super Fund then you may get some problems 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 lot of Australians in the last few years; the ATO informs us it has developed Australia-wide from 758,589 in 2009 to 1,011,689 in 2014. So what happens to these Superfunds when it boils down to Bankruptcy?


As I suggested previously, a fundamental solution to your SMSF concern is to put your super back into a typical regulated managed fund prior to personal bankruptcy and save yourself all the complications described above.

First and foremost, if you are taking into account Bankruptcy, you can not be a part of a SMSF. Why? Considering that if you are confronting personal bankruptcy, you will be grouped as a ‘disqualified person’. And a disqualified individual can not operate as an Individual Trustee. This leads to a challenge because typically most of the SMSFs are just 2 people, which means both of these participants 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 strongly advise you to become aware of them all– for instance because you can not ‘know or suspect’ that one of you are bankrupt. So you can observe how an individual bankruptcy could be somewhat damaging to a SMSF and as you can envision the process of Bankruptcy for a SMSF is rather intricate.

Irrespective if you phone us or somebody else it does not matter, just please do not step into insolvency blind when it relates to your SMSF. In reality because Bankruptcy is so complex with SMSFs we encourage you to get both legal and financial assistance before proceeding with any of the steps indicated in this 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 take into consideration your whole structure and make certain it is complying with the basic rules, consisting of points like maintaining a new trustee that is not coping with issues with Insolvency. The Australian Tax office will provide you a 6 month ‘grace period’ to get this accomplished before you face punishments. And take into consideration, sometimes the most optimal strategy would be to just roll the fund into an industry or corporate fund.

Beyond these large-scale restructuring problems, there is a huge amount of paperwork to take care of too, and you have to be continually keeping the ATO notified of what is happening. This suggests you need to let them know that you have a bankruptcy problem 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 need to notify the ATO using the form NAT 3036 (Found on the ATO website) and they have 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. Bear in mind if you are uncertain call Bankruptcy Experts Mackay for some complimentary advice 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 can be a little bit diverse as you will need to appoint a new director (simply because it can not be you from now on) you will need to make a lot of difficult choices with this so consulting with a professional is going to be necessary. You can contact Bankruptcy Experts Mackay for some free guidance on 1300 795 575.

From that you can discover how whenever it involves Bankruptcy, although one single member is taking care of issues, it can have an effect on the very existence of an SMSF. If you are at this moment facing this concern yourself, or with a partner in a SMSF, please get financial advice to make sure you are satisfying the ATO needs.

Bankruptcy is certainly never simple, but getting correct recommendations is the very best initial step. If you would like to go over your approaches further, give us a call at Bankruptcy Experts Mackay or visit our website: or just call us on 1300 795 575.

By | 2016-09-16T00:00:29+00:00 September 16, 2016|Article, bankruptcy, blog|