Superannuation is confusing enough, let alone when you need to stress over Bankruptcy also. At Bankruptcy Experts Alice Springs we often have individuals asking us about what will occur to their super, and if you have a regulated or industry fund (like most superfunds) then your super is safe, and Bankruptcy will have no impact upon your super. However, if you have a Self-Managed Super Fund then you might find some troubles because there are a number of things you can not do while insolvent surrounding the management of finances.
This is actually a growing concern with a lot 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 boils down to Bankruptcy?
As I recommended previously, a basic option to your SMSF problem is to put your super back into a standard regulated managed fund prior to bankruptcy and save yourself all the problems described above.
Firstly, if you are considering 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 individual can not function as an Individual Trustee. This leads to a problem because generally most of the SMSFs are just 2 people, which means the two of these members 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 highly urge you to become familiar 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 quite damaging to a SMSF and as you can envision the procedure of Bankruptcy for a SMSF is rather convoluted.
Irrespective if you call us or somebody else it does not matter, just please do not step into bankruptcy blind when it relates to your SMSF. In reality because Bankruptcy is so complicated with SMSFs we encourage you to get both legal and financial guidance before proceeding with any of the steps indicated in this post.
So what takes place 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 certainly want to take into consideration your entire structure and make sure it is complying with the basic rules, incorporating aspects 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 punishments. And consider, often the most optimal strategy would be to simply roll the fund into an industry or corporate fund.
More than these large-scale restructuring troubles, there is a lot of paperwork to cope with too, and you have to be continuously keeping the ATO updated of what is occurring. This suggests you have to let them know that you have a bankruptcy problem 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 likewise 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.
During that 6 month time period you will have to remove the Bankrupt from the SMSF– including their property and assets. Keep in mind if you are uncertain call Bankruptcy Experts Alice Springs for some complimentary advice on 1300 795 575.
What happens if I use a single member fund?
However, if you are a single member fund the Bankruptcy can be a bit varied because you will need to appoint a new director (since it can not be you from now on) you are going to need to make a lot of hard decisions with this and so contacting a specialist is going to be necessary. You can easily contact Bankruptcy Experts Alice Springs for some free advice on 1300 795 575.
From that you can acknowledge how whenever it comes to Bankruptcy, although one single member is handling issues, it can have an effect on 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 needs.
Bankruptcy is certainly never simple, but getting appropriate recommendations is the very best initial step. If you wish to go over your choices further, contact us at Bankruptcy Experts Alice Springs or visit our website: www.bankruptcyexpertsalicesprings.com.au or just call us on 1300 795 575.