Superannuation is puzzling enough, let alone when you have to worry about Bankruptcy as well. At Bankruptcy Experts Perth we frequently have individuals questioning us about what may happen to their super, and if you possess 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 have a Self-Managed Super Fund then you may discover some troubles because there are various things you can not do whilst bankrupt surrounding the management of finances.

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This is actually an increasing concern with a number of Australians in the last few years; the ATO tells us it has grown 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 suggested previously, a fundamental option to your SMSF issue is to put your super back into a standard regulated managed fund before personal bankruptcy and save yourself all the troubles described above.

Firstly, if you are considering Bankruptcy, you can not be a part of a SMSF. Why? Because if you are going up against bankruptcy, you will be grouped as a ‘disqualified person’. And a disqualified person can not operate as an Individual Trustee. This poses a problem because usually most of the SMSFs are just 2 individuals, which implies the two 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 highly urge you to be acquainted 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 bankruptcy can be somewhat damaging to a SMSF and as you can imagine the process of Bankruptcy for a SMSF is somewhat complicated.

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 complicated with SMSFs we urge you to get both legal and financial assistance before proceeding with any of the actions pointed out in this article.

So what takes place 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 wish to think about your entire structure and make sure it is complying with the basic terms, including aspects like maintaining a new trustee that is not coping with issues 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, in some cases the most ideal plan would be to just roll the fund into an industry or corporate fund.

Beyond these large-scale restructuring problems, there is a lot of paperwork to handle too, and you have to be continually keeping the ATO updated of what is taking place. This indicates 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 Bankrupt will also need to inform 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 period of time you will have to remove the Bankrupt from the SMSF– including their property and assets. Bear in mind if you are not sure call Bankruptcy Experts Perth for some free advice on 1300 795 575.

What if I use a single member fund?

However, if you are a single member fund the Bankruptcy will certainly be a little bit diverse because you will be required to designate a new director (because it can not be you any longer) you will need to make a great deal of challenging decisions with this and so contacting a professional is going to be vital. You can phone Bankruptcy Experts Perth for some free advice on 1300 795 575.

From that you can acknowledge how when it comes to Bankruptcy, despite the fact that one single member is dealing with concerns, it can influence the very existence of an SMSF. If you are at this moment facing this issue yourself, or with a partner in a SMSF, feel free to seek financial advice to make sure you are meeting the ATO requirements.

Bankruptcy is certainly never uncomplicated, but finding appropriate recommendations is the very best initial step. If you want to talk about your options further, give us a call at Bankruptcy Experts Perth or visit our website: Bankruptcy Perth or just call us on 1300 795 575.