Superannuation is puzzling enough, let alone when you have to think about Bankruptcy as well. At Bankruptcy Experts Adelaide we frequently have a lot of people talking to us about what can occur to their super, and if you have a regulated or industry fund (like most superfunds) then your super is safe, and Bankruptcy will have no effect upon your super. However, if you possess a Self-Managed Super Fund then you may discover some issues because there are certain things you can not do when bankrupt surrounding the management of finances.
This is actually a growing concern with a number of Australians in the last few years; the ATO informs 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 solution to your SMSF concern is to put your super back into a standard regulated managed fund before going bankrupt and save yourself all the issues 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 function as an Individual Trustee. This poses a challenge because usually most of the SMSFs are just 2 people, which means both of these users must also be the individual trustees. The position of trustee sets a bunch of legal guidelines, and if you are in this position I would strongly urge you to be acquainted with them all– as an example the fact that you can not ‘know or suspect’ that one of you are insolvent. Therefore, you can notice how an individual bankruptcy could be quite harmful to a SMSF and as you can envision the procedure of Bankruptcy for a SMSF is somewhat complicated.
Irrespective if you phone us or somebody else it does not matter, just please don’t walk into insolvency blind when it comes to your SMSF. In reality because Bankruptcy is so complex with SMSFs we encourage you to get both legal and financial guidance before proceeding with any one of the steps indicated in this article.
So what takes place if one of the members of an SMSF does enter Bankruptcy?
For starters, the SMSF will want to be restructured. This means that you will want to consider your entire structure and make certain it is complying with the basic terms, including aspects like having a new trustee that is not coping with issues with Personal bankruptcy. The Australian Tax office will provide you a 6 month ‘grace period’ to get this done before you face punishments. And take into consideration, sometimes the most optimal strategy would be to simply roll the fund into an industry or corporate fund.
Beyond these large-scale restructuring matters, there is a great deal of paperwork to take care of too, and you have to be continually keeping the ATO notified of what is occurring. This indicates you need 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 also need 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 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 Adelaide for some free recommendations 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 diverse since you will need to appoint a new director (because it can not be you from now on) you will need to make a great deal of challenging choices with this so getting in touch with a specialist is going to be necessary. You can contact Bankruptcy Experts Adelaide for some free assistance on 1300 795 575.
From that you can discover how when it comes to Bankruptcy, although one single member is handling problems, it can affect the very existence of an SMSF. If you are at this moment facing this concern yourself, or with a partner in a SMSF, feel free to seek financial advice to make sure you are meeting the ATO needs.
Bankruptcy is never uncomplicated, but finding proper advice is the very best first step. If you wish to talk about your choices further, give us a call at Bankruptcy Experts Adelaide or visit our website: www.bankruptcyexpertsadelaide.com.au or just call us on 1300 795 575.