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Bankruptcy and Superannuation.

Bankruptcy and Superannuation.

Superannuation is perplexing enough, let alone when you should think about Bankruptcy as well. At Bankruptcy Experts Cassowary Coast 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 likely have no effect upon your super. Having said that, if you possess a Self-Managed Super Fund then you could find some troubles because there are various things you can not do while insolvent related to the management of finances.

This is really an increasing concern with a lot 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 occurs to these Superfunds when it boils down to Bankruptcy?


As I proposed previously, a fundamental option to your SMSF problem is to put your super back into a standard regulated managed fund prior to bankruptcy and save yourself all the troubles 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 bankruptcy, you will be grouped as a ‘disqualified person’. And a disqualified person can not function as an Individual Trustee. This leads to a challenge because generally most of the SMSFs are just 2 individuals, which implies both of these users 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 highly urge you to become 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 bankruptcy can be rather harmful to a SMSF and as you can imagine the process of Bankruptcy for a SMSF is somewhat complicated.

Regardless if you contact us or somebody else it does not matter, just please do not step into bankruptcy blind when it concerns your SMSF. In fact because Bankruptcy is so complex with SMSFs we encourage you to get both legal and financial advice before proceeding with any one of the actions suggested within this short article.

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 certainly wish to think about your whole structure and make sure it is complying with the basic conditions, consisting of aspects like having a new trustee that is not dealing with issues with Insolvency. The Australian Tax office will provide you a 6 month ‘grace period’ in order to get this done before you face penalties. And consider, often the most ideal strategy would certainly be to simply 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 need to be continuously keeping the ATO informed 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 removed as soon as possible and let them know who the new trustee/director is. The Bankrupt will likewise have to update 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 have to remove the Bankrupt from the SMSF– including their property and assets. Keep in mind if you are uncertain call Bankruptcy Experts Cassowary Coast for some complimentary suggestions 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 bit varied because you will want to designate a new director (because it can not be you from now on) you are going to need to make a great deal of difficult choices with this so contacting a professional is going to be important. You can get in touch with Bankruptcy Experts Cassowary Coast for some free assistance on 1300 795 575.

From that you can acknowledge how whenever it involves Bankruptcy, although one single member is taking care of concerns, it can affect 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 get financial advice to make sure you are meeting the ATO needs.

Bankruptcy is certainly never simple, but getting proper advice is the best first step. If you would like to talk about your options further, give us a call at Bankruptcy Experts Cassowary Coast or visit our website: or just call us on 1300 795 575.