Bankruptcy and Superannuation.
Superannuation is perplexing enough, let alone when you need to think about Bankruptcy also. At Bankruptcy Experts Ipswich we frequently have people asking us about what may occur to their super, and if you have a regulated or industry fund (like most superfunds) then your super is secure, and Bankruptcy will likely have no influence upon your super. Nonetheless, if you possess a Self-Managed Super Fund then you might discover some troubles because there are various things you can not do whilst bankrupt surrounding the management of finances.
This is really an increasing concern with a lot 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 happens to these Superfunds when it boils down to Bankruptcy?
As I suggested previously, a fundamental solution to your SMSF concern is to put your super back into a typical regulated managed fund before going bankrupt and save yourself all the troubles outlined above.
First and foremost, if you are taking into account Bankruptcy, you can not be a part of a SMSF. Why? Because if you are confronting personal bankruptcy, you will be grouped as a ‘disqualified person’. And a disqualified person can not function as an Individual Trustee. This leads to a problem because normally most of the SMSFs are just 2 people, which implies both of these users must also be the individual trustees. The position of trustee sets a great deal of legal rules, and if you are in this position I would highly urge you to become acquainted with them all– as an example because you can not ‘know or suspect’ that one of you are bankrupt. Therefore, you can notice how an individual bankruptcy can be rather damaging to a SMSF and as you can envision the procedure of Bankruptcy for a SMSF is rather intricate.
Irrespective if you call us or somebody else it does not matter, just please do not step into insolvency blind when it comes to your SMSF. In reality because Bankruptcy is so complicated with SMSFs we urge you to get both legal and financial recommendations before proceeding with any of the steps pointed out within this post.
So what takes place if one of the members of an SMSF does enter Bankruptcy?
For starters, the SMSF will need to be reorganized. This means that you will wish to think about your whole structure and make sure it is complying with the basic requirements, incorporating points like having a new trustee that is not dealing with issues with Bankruptcy. The Australian Tax office will offer you a 6 month ‘grace period’ to get this accomplished before you face penalties. And take into consideration, in some cases the most optimal plan would be to simply roll the fund into an industry or corporate fund.
More than these large-scale restructuring difficulties, there is a great deal of paperwork to take care of too, and you have to be continually keeping the ATO updated 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 quickly as possible and let them know who the new trustee/director is. The Bankrupt will also have to update 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 period 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 Ipswich for some free recommendations 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 will be a bit diverse because you will be required to designate a new director (as it can not be you any longer) you are going to need to make a great deal of challenging selections with this and so contacting a specialist is going to be necessary. You can contact Bankruptcy Experts Ipswich for some free assistance on 1300 795 575.
From that you can notice how whenever it comes to Bankruptcy, even though one single member is dealing with issues, 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 meeting the ATO demands.
Bankruptcy is certainly never easy, but getting proper suggestions is the very best initial step. If you would like to talk about your options further, give us a call at Bankruptcy Experts Ipswich or visit our website: www.bankruptcyexpertsipswich.com.au or just call us on 1300 795 575.