Superannuation is confusing enough, let alone when you should think about Bankruptcy too. At Bankruptcy Experts Dubbo we frequently have a lot of people questioning 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 likely have no influence upon your super. Having said that, if you have a Self-Managed Super Fund then you may discover some problems because there are certain things you can not do whilst bankrupt surrounding the management of finances.
This is really an increasing 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 comes down to Bankruptcy?
As I proposed previously, a basic option to your SMSF problem is to put your super back into a normal regulated managed fund prior to bankruptcy and save yourself all the problems described 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 bankruptcy, you will be grouped as a ‘disqualified person’. And a disqualified person can not function as an Individual Trustee. This poses a problem because usually 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 great deal of legal rules, and if you are in this position I would highly urge you to be aware of them all– for example because 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 convoluted.
Irrespective if you phone us or somebody else it does not matter, just please don’t walk into bankruptcy blind when it concerns your SMSF. In reality because Bankruptcy is so complicated with SMSFs we encourage you to get both legal and financial advice before proceeding with any of the steps suggested in 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 want to think about your whole structure and make sure it is meeting the basic terms, including aspects like having a new trustee that is not dealing with problems with Bankruptcy. The Australian Tax office will offer you a 6 month ‘grace period’ to get this accomplished before you face penalties. And take into consideration, sometimes the most ideal strategy would be to simply roll the fund into an industry or corporate fund.
Beyond these large-scale restructuring challenges, there is a great deal of paperwork to handle too, and you need to be continually keeping the ATO informed of what is occurring. This suggests you have 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 Bankrupt will additionally have 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 duration you will need to remove the Bankrupt from the SMSF– including their property and assets. Just remember if you are uncertain call Bankruptcy Experts Dubbo 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 certainly be a bit diverse since you will want to designate a new director (because it can not be you from now on) you will need to make a lot of hard choices with this therefore contacting a professional is going to be important. You can easily phone Bankruptcy Experts Dubbo for some free advice on 1300 795 575.
From that you can notice how when it comes to Bankruptcy, even though one single member is handling concerns, it can have an effect on 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 meeting the ATO needs.
Bankruptcy is certainly never easy, but finding proper suggestions is the very best first step. If you want to go over your options further, contact us at Bankruptcy Experts Dubbo or visit our website: www.bankruptcyexpertsdubbo.com.au or just call us on 1300 795 575.