Superannuation is perplexing enough, let alone when you should worry about Bankruptcy too. At Bankruptcy Experts Lismore we often have individuals questioning us about what can happen 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 may get some concerns because there are various things you can not do whilst bankrupt related to the management of finances.
This is actually an increasing concern with a lot 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 proposed previously, a fundamental option to your SMSF problem is to put your super back into a typical regulated managed fund prior to bankruptcy and save yourself all the problems described above.
First and foremost, if you are considering Bankruptcy, you can not be a part of a SMSF. Why? Because if you are going up against personal bankruptcy, you will be grouped as a ‘disqualified person’. And a disqualified individual can not function as an Individual Trustee. This leads to a complication because usually most of the SMSFs are just 2 individuals, which implies both of these users must also be the individual trustees. The position of trustee sets a lot of legal rules, and if you are in this position I would highly urge you to be aware of them all– for instance the fact that you can not ‘know or suspect’ that one of you are bankrupt. So you can observe how an individual insolvency could be quite harmful to a SMSF and as you can envision the procedure of Bankruptcy for a SMSF is somewhat convoluted.
Regardless if you phone us or somebody else it does not matter, just please do not step into insolvency blind when it relates to your SMSF. In fact because Bankruptcy is so complicated with SMSFs we encourage you to get both legal and financial assistance before proceeding with any of the steps indicated in this short article.
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 wish to think about your entire structure and ensure it is meeting the basic rules, incorporating things like maintaining a new trustee that is not dealing with issues with Personal bankruptcy. The Australian Tax office will offer you a 6 month ‘grace period’ to get this accomplished before you face punishments. And consider, in some cases the most optimal strategy would be to just roll the fund into an industry or corporate fund.
More than these large-scale restructuring troubles, there is a lot of paperwork to handle too, and you need to be continuously keeping the ATO notified of what is taking place. This shows 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 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 you will need to remove the Bankrupt from the SMSF– including their property and assets. Just remember if you are uncertain call Bankruptcy Experts Lismore 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 will certainly be a little bit varied since you will be required to designate a new director (simply because it can not be you any longer) you will need to make a great deal of difficult decisions with this therefore contacting a professional is going to be very important. You can easily get in touch with Bankruptcy Experts Lismore for some free advice on 1300 795 575.
From that you can notice how when it comes to Bankruptcy, despite the fact that one single member is handling problems, it can have an effect on the very existence of an SMSF. If you are at this moment facing this matter yourself, or with a partner in a SMSF, feel free to seek financial advice to make sure you are meeting the ATO needs.
Bankruptcy is never uncomplicated, but finding proper recommendations is the most effective first step. If you would like to talk about your choices further, give us a call at Bankruptcy Experts Lismore or visit our website: www.bankruptcyexpertslismore.com.au or just call us on 1300 795 575.