Superannuation is confusing enough, let alone when you should worry about Bankruptcy as well. At Bankruptcy Experts Tennant Creek we frequently have a lot of people asking us about what can happen to their super, and if you have a regulated or industry fund (like most superfunds) then your super is safe, and Bankruptcy will likely have no impact upon your super. Having said that, if you have a Self-Managed Super Fund then you might find some troubles because there are certain things you can not do while 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 informs us it has developed 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 proposed earlier, a basic option to your SMSF issue is to put your super back into a typical regulated managed fund before going bankrupt and save yourself all the issues outlined above.
First and foremost, if you are thinking about 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 operate as an Individual Trustee. This leads to a complication because generally 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 great deal of legal guidelines, and if you are in this position I would strongly urge you to become aware of them all– for instance the fact that you can not ‘know or suspect’ that one of you are insolvent. Therefore, you can notice how an individual insolvency can be quite damaging to a SMSF and as you can picture the process of Bankruptcy for a SMSF is rather complicated.
Irrespective if you phone us or somebody else it does not matter, just please don’t step into insolvency blind when it comes to your SMSF. In fact because Bankruptcy is so complicated with SMSFs we encourage you to get both legal and financial advice before proceeding with any one of the steps pointed out within this article.
So what occurs 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 wish to consider your entire structure and ensure it is satisfying the basic requirements, including aspects like maintaining a new trustee that is not dealing with issues with Personal bankruptcy. The Australian Tax office will offer you a 6 month ‘grace period’ in order to get this done before you face penalties. And consider, in some cases the most ideal plan would certainly be to simply roll the fund into an industry or corporate fund.
Beyond these large-scale restructuring troubles, there is a great deal of paperwork to take care of too, and you need to be constantly keeping the ATO notified 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 likewise have to inform the ATO using the form NAT 3036 (Found on the ATO website) and they have to also notify ASIC of their resignation.
In the course of that 6 month time period you will need to remove the Bankrupt from the SMSF– including their property and assets. Keep in mind if you are uncertain call Bankruptcy Experts Tennant Creek for some free recommendations on 1300 795 575.
What if I use a single member fund?
On the other hand, if you are a single member fund the Bankruptcy will certainly be a little bit varied since you will be required to appoint a new director (because it can not be you any longer) you will need to make a great deal of difficult decisions with this so contacting a specialist is going to be necessary. You can get in touch with Bankruptcy Experts Tennant Creek for some free guidance on 1300 795 575.
From that you can notice how whenever it involves Bankruptcy, even though one single member is taking care of troubles, 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, please seek financial advice to make sure you are satisfying the ATO needs.
Bankruptcy is certainly never easy, but finding correct advice is the very best first step. If you wish to discuss your choices further, contact us at Bankruptcy Experts Tennant Creek or visit our website: www.bankruptcyexpertstennantcreek.com.au or just call us on 1300 795 575.