Superannuation is confusing enough, not to mention when you need to think about Bankruptcy as well. At Bankruptcy Experts Geraldton we often have a lot of people asking us about what can take place 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. Nonetheless, if you have a Self-Managed Super Fund then you might discover some concerns because there are various things you can not do whilst bankrupt related to the management of finances.
This is actually an increasing 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 fundamental option to your SMSF concern is to put your super back into a normal regulated managed fund prior to going bankrupt and save yourself all the issues described above.
Firstly, if you are considering Bankruptcy, you can not be a part of a SMSF. Why? Considering that if you are going up against bankruptcy, 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 generally most of the SMSFs are just 2 individuals, which means the two of these users 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. So you can notice how an individual insolvency could be rather damaging to a SMSF and as you can imagine the procedure of Bankruptcy for a SMSF is rather complicated.
Regardless if you contact us or somebody else it does not matter, just please do not step into insolvency 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 guidance before proceeding with any one of the actions pointed out within this article.
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 certainly want to consider your entire structure and make sure it is complying with the basic rules, incorporating things like maintaining a new trustee that is not dealing with problems with Bankruptcy. The Australian Tax office will provide you a 6 month ‘grace period’ in order to get this completed before you face penalties. And consider, sometimes the most ideal strategy would be to simply roll the fund into an industry or corporate fund.
More than these large-scale restructuring issues, there is a huge amount of paperwork to deal with too, and you need to be continuously keeping the ATO notified of what is taking place. This shows 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 Insolvent will additionally need to inform the ATO using the form NAT 3036 (Found on the ATO website) and they have to also notify ASIC of their resignation.
Throughout that 6 month period of time you will have to remove the Bankrupt from the SMSF– including their property and assets. Remember if you are uncertain call Bankruptcy Experts Geraldton 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 little bit different as you will be required to appoint a new director (simply because it can not be you from now on) you will need to make a great deal of challenging choices with this so consulting with a professional is going to be necessary. You can easily contact Bankruptcy Experts Geraldton for some free guidance on 1300 795 575.
From that you can acknowledge how whenever it comes to Bankruptcy, although one single member is dealing with problems, it can influence the very existence of an SMSF. If you are at this point facing this matter yourself, or with a partner in a SMSF, feel free to get financial advice to make sure you are fulfilling the ATO demands.
Bankruptcy is certainly never easy, but finding appropriate guidance is the best first step. If you would like to go over your approaches further, give us a call at Bankruptcy Experts Geraldton or visit our website: www.bankruptcyexpertsgeraldton.com.au or just call us on 1300 795 575.