Superannuation is puzzling enough, not to mention when you have to stress over Bankruptcy too. At Bankruptcy Experts Newcastle we often have people asking us about what may 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 impact upon your super. Having said that, if you possess a Self-Managed Super Fund then you might find some concerns because there are certain things you can not do while insolvent surrounding the management of finances.

This is really an increasing 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 happens to these Superfunds when it boils down to Bankruptcy?

As I recommended previously, a fundamental option to your SMSF issue is to put your super back into a typical regulated managed fund before insolvency and save yourself all the complications outlined above.

Firstly, if you are considering 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 operate 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 users 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 advise 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 picture the procedure of Bankruptcy for a SMSF is somewhat convoluted.

Irrespective if you call us or somebody else it does not matter, just please do not step 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 steps pointed out in this post.

So what takes place if one of the members of an SMSF does enter Bankruptcy?

For starters, the SMSF will want to be reorganized. This means that you will certainly want to take into consideration your entire structure and make certain it is satisfying the basic rules, incorporating things like having a new trustee that is not dealing with issues with Bankruptcy. The Australian Tax office will offer you a 6 month ‘grace period’ in order to get this completed before you face punishments. And consider, often the most optimal strategy would certainly be to simply roll the fund into an industry or corporate fund.

Beyond these large-scale restructuring matters, there is a huge amount of paperwork to cope with 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 removed as soon as possible and let them know who the new trustee/director is. The Bankrupt will also need to notify 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 time period you will have to remove the Bankrupt from the SMSF– including their property and assets. Just remember if you are uncertain call Bankruptcy Experts Newcastle for some complimentary suggestions on 1300 795 575.

What if I use a single member fund?

However, if you are a single member fund the Bankruptcy can be a little bit different because you will be required to designate a new director (as it can not be you from now on) you are going to need to make a lot of challenging choices with this so consulting with a specialist is going to be important. You can contact Bankruptcy Experts Newcastle for some free advice on 1300 795 575.

From that you can discover how whenever it involves Bankruptcy, despite the fact that one single member is handling problems, it can influence the very existence of an SMSF. If you are at this moment facing this concern yourself, or with a partner in a SMSF, please get financial advice to make sure you are meeting the ATO requirements.

Bankruptcy is certainly never easy, but finding correct suggestions is the best initial step. If you wish to discuss your approaches further, contact us at Bankruptcy Experts Newcastle or visit our website: or just call us on 1300 795 575.