Superannuation is perplexing enough, not to mention when you should stress over Bankruptcy as well. At Bankruptcy Experts Darwin we often have a lot of people talking to us about what can occur 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 influence upon your super. However, if you possess a Self-Managed Super Fund then you may get some issues because there are various things you can not do whilst insolvent surrounding the management of finances.
This is actually 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 earlier, a fundamental option to your SMSF concern is to put your super back into a standard regulated managed fund before insolvency and save yourself all the troubles outlined above.
First and foremost, if you are taking into consideration Bankruptcy, you can not be a part of a SMSF. Why? Considering that if you are confronting insolvency, you will be grouped as a ‘disqualified person’. And a disqualified person can not function as an Individual Trustee. This poses a challenge because normally most of the SMSFs are just 2 people, which means the two 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 become aware of them all– for example because you can not ‘know or suspect’ that one of you are bankrupt. Therefore, you can observe how an individual insolvency could be quite harmful to a SMSF and as you can picture the procedure of Bankruptcy for a SMSF is somewhat intricate.
Irrespective if you contact us or somebody else it does not matter, just please don’t step into bankruptcy 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 of the actions pointed out within this article.
So what occurs if one of the members of an SMSF does enter Insolvency?
For starters, the SMSF will want to be reorganized. This means that you will certainly wish to take into consideration your whole structure and make certain it is complying with the basic conditions, consisting of things like having a new trustee that is not dealing with issues with Insolvency. The Australian Tax office will provide you a 6 month ‘grace period’ in order to get this done before you face punishments. And consider, in some cases the most ideal strategy would be to simply roll the fund into an industry or corporate fund.
More than these large-scale restructuring concerns, there is a great deal of paperwork to cope with too, and you need to be continually keeping the ATO notified of what is taking place. This suggests you need to let them know that you have a bankruptcy issue 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 notify the ATO using the form NAT 3036 (Found on the ATO website) and they need to also notify ASIC of their resignation.
In the course of that 6 month period of time you will have to remove the Bankrupt from the SMSF– including their property and assets. Bear in mind if you are uncertain call Bankruptcy Experts Darwin for some free advice 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 certainly be a bit different as you will be required to appoint a new director (because it can not be you any longer) you will need to make a lot of difficult choices with this so consulting with a specialist is going to be necessary. You can get in touch with Bankruptcy Experts Darwin for some free assistance on 1300 795 575.
From that you can discover how when it comes to Bankruptcy, although 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 matter yourself, or with a partner in a SMSF, please get financial advice to make sure you are fulfilling the ATO demands.
Bankruptcy is certainly never uncomplicated, but finding appropriate advice is the very best initial step. If you wish to go over your options further, give us a call at Bankruptcy Experts Darwin or visit our website: www.bankruptcyexpertsdarwin.com.au or just call us on 1300 795 575.