Bankruptcy and Superannuation.
Superannuation is perplexing enough, not to mention when you should think about Bankruptcy as well. At Bankruptcy Experts Tamworth we often have people asking 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 impact upon your super. Nonetheless, if you possess a Self-Managed Super Fund then you may find some troubles because there are a number of things you can not do when insolvent surrounding the management of finances.
This is actually a growing concern with a number of Australians in the last few years; the ATO informs 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 suggested previously, a basic option to your SMSF problem is to put your super back into a normal regulated managed fund before going bankrupt and save yourself all the issues described above.
Firstly, if you are thinking about Bankruptcy, you can not be a part of a SMSF. Why? Considering that if you are going up against personal bankruptcy, you will be grouped as a ‘disqualified person’. And a disqualified individual can not operate as an Individual Trustee. This leads to a complication because usually most of the SMSFs are just 2 people, which means the two of these participants must also be the individual trustees. The position of trustee sets a bunch of legal rules, and if you are in this position I would highly advise you to be acquainted with them all– for example because you can not ‘know or suspect’ that one of you are bankrupt. So you can notice how an individual insolvency could be somewhat damaging to a SMSF and as you can envision the process of Bankruptcy for a SMSF is rather complicated.
Regardless if you phone us or somebody else it does not matter, just please don’t walk into bankruptcy blind when it concerns your SMSF. In reality because Bankruptcy is so complex with SMSFs we urge you to get both legal and financial advice before proceeding with any of the actions pointed out within this short article.
So what takes place 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 want to consider your entire structure and make certain it is satisfying the basic requirements, incorporating points 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’ to get this completed before you face punishments. And take into consideration, in some cases the most ideal strategy would certainly be to simply roll the fund into an industry or corporate fund.
More than these large-scale restructuring matters, there is a lot of paperwork to take care of too, and you need to be continuously 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 need to update the ATO using the form NAT 3036 (Found on the ATO website) and they need to also notify ASIC of their resignation.
Throughout that 6 month period of time you will need to remove the Bankrupt from the SMSF– including their property and assets. Remember if you are uncertain call Bankruptcy Experts Tamworth for some free assistance 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 can be a little bit different since you will want to designate a new director (since it can not be you anymore) you are going to need to make a great deal of tough choices with this and so contacting a specialist is going to be very important. You can easily phone Bankruptcy Experts Tamworth for some free guidance on 1300 795 575.
From that you can notice how when it involves Bankruptcy, although one single member is dealing with troubles, it can influence the very existence of an SMSF. If you are at this point facing this concern yourself, or with a partner in a SMSF, feel free to seek financial advice to make sure you are satisfying the ATO demands.
Bankruptcy is never uncomplicated, but getting appropriate suggestions is the very best initial step. If you would like to go over your choices further, give us a call at Bankruptcy Experts Tamworth or visit our website: www.bankruptcyexpertstamworth.com.au or just call us on 1300 795 575.