Bankruptcy and Superannuation.
Superannuation is perplexing enough, not to mention when you need to worry about Bankruptcy too. At Bankruptcy Experts Joondalup we frequently have individuals talking to 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 effect upon your super. Having said that, if you possess a Self-Managed Super Fund then you might get some troubles because there are various things you can not do whilst bankrupt surrounding the management of finances.
This is actually an increasing concern with a lot of Australians in the last few years; the ATO tells us it has increased 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 suggested earlier, a fundamental option to your SMSF problem is to put your super back into a typical regulated managed fund before bankruptcy and save yourself all the troubles described above.
First and foremost, if you are considering Bankruptcy, you can not be a part of a SMSF. Why? Because if you are going up against personal bankruptcy, you will be grouped as a ‘disqualified person’. And a disqualified individual can not operate as an Individual Trustee. This poses a problem because usually most of the SMSFs are just 2 people, which implies the two of these users must also be the individual trustees. The position of trustee sets a bunch of legal rules, and if you are in this position I would highly urge you to become aware of them all– as an example the fact that you can not ‘know or suspect’ that one of you are bankrupt. So you can observe how an individual insolvency could be rather damaging to a SMSF and as you can picture the procedure of Bankruptcy for a SMSF is rather intricate.
Regardless if you contact us or somebody else it does not matter, just please do not step into insolvency blind when it relates to 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 one of the actions suggested in this short article.
So what occurs if one of the members of an SMSF does enter Insolvency?
For starters, the SMSF will need to be reorganized. This means that you will wish to consider your entire structure and ensure it is complying with the basic rules, consisting of things like maintaining a new trustee that is not coping with issues with Bankruptcy. The Australian Tax office will provide you a 6 month ‘grace period’ in order to get this completed before you face penalties. And take into consideration, sometimes the most ideal strategy would certainly be to simply roll the fund into an industry or corporate fund.
More than these large-scale restructuring matters, there is a lot of paperwork to deal with too, and you need to be continuously keeping the ATO notified of what is happening. This indicates you have to let them know that you have a bankruptcy problem with your current trustee, that they are being eliminated as quickly as possible and let them know who the new trustee/director is. The Bankrupt will likewise need to notify 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 time period 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 Joondalup for some free advice on 1300 795 575.
What happens if I use a single member fund?
However, if you are a single member fund the Bankruptcy will be a little bit different because you will want to designate a new director (since it can not be you any longer) you will need to make a lot of difficult choices with this therefore getting in touch with a professional is going to be important. You can phone Bankruptcy Experts Joondalup for some free guidance on 1300 795 575.
From that you can discover how when it involves Bankruptcy, even though one single member is managing issues, it can have an effect on the very existence of an SMSF. If you are at this point facing this issue yourself, or with a partner in a SMSF, feel free to seek financial advice to make sure you are fulfilling the ATO needs.
Bankruptcy is certainly never easy, but finding proper suggestions is the very best initial step. If you want to talk about your options further, give us a call at Bankruptcy Experts Joondalup or visit our website: www.bankruptcyexpertsjoondalup.com.au or just call us on 1300 795 575.