Superannuation is puzzling enough, not to mention when you have to think about Bankruptcy as well. At Bankruptcy Experts Shepparton we often have a lot of people asking us about what will happen to their super, and if you possess a regulated or industry fund (like most superfunds) then your super is safe, and Bankruptcy will have no influence upon your super. Having said that, if you have a Self-Managed Super Fund then you could get some problems because there are a number of 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 boils down to Bankruptcy?
As I proposed earlier, a fundamental solution to your SMSF concern is to put your super back into a standard regulated managed fund prior to personal bankruptcy and save yourself all the complications described above.
Firstly, if you are taking into consideration Bankruptcy, you can not be a part of a SMSF. Why? Because if you are confronting insolvency, you will be grouped as a ‘disqualified person’. And a disqualified individual can not operate as an Individual Trustee. This leads to a challenge because normally most of the SMSFs are just 2 individuals, which implies the two of these participants must also be the individual trustees. The position of trustee sets a lot of legal guidelines, and if you are in this position I would highly urge you to become familiar with them all– as an example the fact that you can not ‘know or suspect’ that one of you are bankrupt. Therefore, you can observe how an individual insolvency can be somewhat damaging to a SMSF and as you can imagine the process of Bankruptcy for a SMSF is rather intricate.
Irrespective if you contact us or somebody else it does not matter, just please don’t walk into insolvency blind when it relates to your SMSF. In fact because Bankruptcy is so complex with SMSFs we urge you to get both legal and financial recommendations before proceeding with any one of the steps suggested in this post.
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 wish to consider your entire structure and make certain it is satisfying the basic terms, consisting of points like maintaining a new trustee that is not coping with issues with Personal bankruptcy. The Australian Tax office will offer you a 6 month ‘grace period’ to get this completed before you face punishments. And consider, often the most ideal plan would be to just roll the fund into an industry or corporate fund.
Beyond these large-scale restructuring issues, there is a huge amount of paperwork to deal with too, and you have to be constantly keeping the ATO informed of what is occurring. This shows 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 Insolvent will also 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.
In the course of that 6 month time period 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 Shepparton for some complimentary 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 bit diverse because you will be required to appoint a new director (because it can not be you anymore) you are going to need to make a great deal of difficult choices with this therefore contacting a professional is going to be essential. You can easily phone Bankruptcy Experts Shepparton for some free guidance on 1300 795 575.
From that you can notice how when it involves Bankruptcy, although one single member is managing concerns, it can affect 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 fulfilling the ATO requirements.
Bankruptcy is certainly never uncomplicated, but finding correct suggestions is the very best initial step. If you would like to discuss your options further, give us a call at Bankruptcy Experts Shepparton or visit our website: www.bankruptcyexpertsshepparton.com.au or just call us on 1300 795 575.