Superannuation is perplexing enough, not to mention when you need to think about Bankruptcy too. At Bankruptcy Experts Shellharbour we frequently have individuals asking us about what will take place 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 impact upon your super. However, if you possess a Self-Managed Super Fund then you may get some troubles because there are various things you can not do whilst bankrupt related to the management of finances.
This is really a growing 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 occurs to these Superfunds when it comes down to Bankruptcy?
As I suggested previously, a fundamental solution to your SMSF problem is to put your super back into a typical regulated managed fund before going bankrupt and save yourself all the troubles outlined above.
Firstly, if you are taking into consideration 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 problem because typically most of the SMSFs are just 2 individuals, which implies the two of these members 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 strongly advise you to be acquainted with them all– for instance the fact that you can not ‘know or suspect’ that one of you are insolvent. So you can observe how an individual insolvency could be quite harmful to a SMSF and as you can picture the process of Bankruptcy for a SMSF is rather intricate.
Regardless if you phone us or somebody else it does not matter, just please do not walk into bankruptcy blind when it concerns your SMSF. In fact because Bankruptcy is so complicated with SMSFs we encourage you to get both legal and financial assistance before proceeding with any of the actions indicated in this post.
So what occurs if one of the members of an SMSF does enter Bankruptcy?
For starters, the SMSF will need to be restructured. This means that you will certainly want to think about your whole structure and make certain it is satisfying the basic conditions, including aspects like having a new trustee that is not coping with problems with Insolvency. The Australian Tax office will offer you a 6 month ‘grace period’ to get this completed before you face punishments. And take into consideration, sometimes the most ideal plan would be to just roll the fund into an industry or corporate fund.
Beyond these large-scale restructuring concerns, there is a huge amount of paperwork to handle too, and you need to be continuously keeping the ATO updated of what is occurring. This shows you need to let them know that you have a bankruptcy issue with your current trustee, that they are being removed as quickly as possible and let them know who the new trustee/director is. The Bankrupt will likewise need to inform the ATO using the form NAT 3036 (Found on the ATO website) and they have to also notify ASIC of their resignation.
Throughout that 6 month period of time you will need to remove the Bankrupt from the SMSF– including their property and assets. Just remember if you are uncertain call Bankruptcy Experts Shellharbour for some complimentary recommendations on 1300 795 575.
What if I use a single member fund?
However, if you are a single member fund the Bankruptcy will be a bit different as you will be required to designate a new director (simply because it can not be you anymore) you are going to need to make a great deal of hard selections with this so consulting with a professional is going to be vital. You can easily contact Bankruptcy Experts Shellharbour for some free advice on 1300 795 575.
From that you can acknowledge how when it involves Bankruptcy, even though one single member is dealing with troubles, it can affect the very existence of an SMSF. If you are at this point facing this concern yourself, or with a partner in a SMSF, feel free to get financial advice to make sure you are fulfilling the ATO needs.
Bankruptcy is never easy, but getting correct recommendations is the best first step. If you want to discuss your options further, give us a call at Bankruptcy Experts Shellharbour or visit our website: www.bankruptcyexpertsshellharbour.com.au or just call us on 1300 795 575.