Superannuation is puzzling enough, not to mention when you need to stress over Bankruptcy as well. At Bankruptcy Experts Penrith we frequently have a lot of people talking to us about what can happen to their super, and if you have a regulated or industry fund (like most superfunds) then your super is secure, and Bankruptcy will have no effect upon your super. Nonetheless, if you have a Self-Managed Super Fund then you might discover some problems because there are a number of things you can not do whilst insolvent surrounding the management of finances.
This is really a growing concern with a number of Australians in the last few years; the ATO tells us it has increased 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 recommended previously, a basic option to your SMSF problem is to put your super back into a normal regulated managed fund before insolvency and save yourself all the complications outlined above.
Firstly, if you are taking into account 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 person can not function as an Individual Trustee. This poses a problem because usually 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 great deal of legal rules, and if you are in this position I would highly urge you to become aware of them all– as an example the fact that you can not ‘know or suspect’ that one of you are insolvent. So you can observe how an individual insolvency can be rather damaging to a SMSF and as you can imagine the procedure of Bankruptcy for a SMSF is rather complicated.
Irrespective if you call us or somebody else it does not matter, just please don’t step into bankruptcy blind when it concerns your SMSF. In fact because Bankruptcy is so complex with SMSFs we encourage you to get both legal and financial assistance before proceeding with any of the decisions indicated within this article.
So what occurs if one of the members of an SMSF does enter Insolvency?
For starters, the SMSF will need to be reorganized. This means that you will want to take into consideration your whole structure and ensure it is meeting 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 provide you a 6 month ‘grace period’ to get this accomplished before you face punishments. And take into consideration, often the most ideal strategy would be to just roll the fund into an industry or corporate fund.
More than these large-scale restructuring complications, there is a lot of paperwork to take care of too, and you need to be continually keeping the ATO notified of what is taking place. This shows you need to let them know that you have a bankruptcy issue with your current trustee, that they are being eliminated as soon as possible and let them know who the new trustee/director is. The Insolvent will also have to notify the ATO using the form NAT 3036 (Found on the ATO website) and they will need to also notify ASIC of their resignation.
Throughout that 6 month time frame you will have to remove the Bankrupt from the SMSF– including their property and assets. Keep in mind if you are not sure call Bankruptcy Experts Penrith for some free advice on 1300 795 575.
What if I use a single member fund?
However, if you are a single member fund the Bankruptcy will certainly be a bit varied because you will want to appoint a new director (because it can not be you anymore) you are going to need to make a great deal of hard selections with this so speaking to a specialist is going to be very important. You can easily contact Bankruptcy Experts Penrith for some free guidance on 1300 795 575.
From that you can discover how whenever it involves Bankruptcy, despite the fact that one single member is dealing with problems, it can affect the very existence of an SMSF. If you are at this moment facing this concern yourself, or with a partner in a SMSF, please seek financial advice to make sure you are fulfilling the ATO needs.
Bankruptcy is never simple, but getting correct recommendations is the most effective initial step. If you wish to go over your approaches further, give us a call at Bankruptcy Experts Penrith or visit our website: www.bankruptcyexpertspenrith.com.au or just call us on 1300 795 575.