Superannuation is confusing enough, let alone when you have to worry about Bankruptcy as well. At Bankruptcy Experts Wyong we frequently have people questioning us about what may take place to their super, and if you have a regulated or industry fund (like most superfunds) then your super is secure, and Bankruptcy will likely have no effect upon your super. Having said that, if you possess a Self-Managed Super Fund then you may discover some problems because there are a number of things you can not do whilst bankrupt surrounding the management of finances.
This is really an increasing concern with a lot of Australians in the last few years; the ATO tells 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 proposed previously, a fundamental solution to your SMSF issue is to put your super back into a normal regulated managed fund before insolvency and save yourself all the complications described above.
First and foremost, if you are taking into account 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 challenge 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 instance because you can not ‘know or suspect’ that one of you are bankrupt. So you can notice how an individual bankruptcy could be quite harmful to a SMSF and as you can picture the procedure of Bankruptcy for a SMSF is somewhat complicated.
Regardless if you contact us or somebody else it does not matter, just please don’t step into bankruptcy blind when it comes to your SMSF. In fact because Bankruptcy is so complex with SMSFs we urge you to get both legal and financial guidance before proceeding with any of the steps indicated within this post.
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 wish to consider your entire structure and make sure it is complying with the basic terms, consisting of points like having a new trustee that is not dealing with issues 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, often the most optimal plan would be to just roll the fund into an industry or corporate fund.
More than these large-scale restructuring complications, there is a great deal of paperwork to take care of too, and you have to be continually keeping the ATO notified of what is occurring. This suggests you have 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 Insolvent will likewise 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 time frame you will have to remove the Bankrupt from the SMSF– including their property and assets. Remember if you are not sure call Bankruptcy Experts Wyong for some free assistance 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 little bit diverse since you will be required to appoint a new director (because it can not be you any longer) you will need to make a lot of hard selections with this therefore getting in touch with a professional is going to be essential. You can easily get in touch with Bankruptcy Experts Wyong for some free assistance on 1300 795 575.
From that you can acknowledge how whenever it comes to Bankruptcy, although one single member is handling troubles, 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, please get financial advice to make sure you are satisfying the ATO requirements.
Bankruptcy is certainly never simple, but getting proper suggestions is the most effective initial step. If you want to go over your choices further, give us a call at Bankruptcy Experts Wyong or visit our website: www.bankruptcyexpertswyong.com.au or just call us on 1300 795 575.