Superannuation is perplexing enough, not to mention when you should think about Bankruptcy too. At Bankruptcy Experts Coffs Harbour we often have people questioning us about what can happen to their super, and if you possess a regulated or industry fund (like most superfunds) then your super is safe, and Bankruptcy will likely have no effect upon your super. Having said that, if you possess a Self-Managed Super Fund then you might discover some troubles because there are various things you can not do when bankrupt surrounding the management of finances.
This is actually an increasing concern with a lot of Australians in the last few years; the ATO tells us it has increased 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 earlier, a fundamental solution to your SMSF issue is to put your super back into a typical regulated managed fund before insolvency and save yourself all the issues outlined above.
Firstly, if you are thinking about Bankruptcy, you can not be a part of a SMSF. Why? Because if you are going up against insolvency, you will be grouped as a ‘disqualified person’. And a disqualified individual can not operate as an Individual Trustee. This leads to a challenge because usually most of the SMSFs are just 2 individuals, which implies the two of these members 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 become aware of them all– for example because you can not ‘know or suspect’ that one of you are bankrupt. Therefore, you can observe how an individual insolvency can be rather damaging to a SMSF and as you can picture the process of Bankruptcy for a SMSF is rather complicated.
Irrespective if you phone us or somebody else it does not matter, just please do not walk into bankruptcy blind when it relates to your SMSF. In fact because Bankruptcy is so complex with SMSFs we encourage you to get both legal and financial recommendations before proceeding with any one of the steps pointed out within 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 restructured. This means that you will certainly want to take into consideration your entire structure and make certain it is meeting the basic conditions, consisting of aspects 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 accomplished before you face penalties. And take into consideration, in some cases the most ideal plan would be to just roll the fund into an industry or corporate fund.
More than these large-scale restructuring challenges, there is a great deal of paperwork to cope with too, and you have to be constantly keeping the ATO updated of what is happening. This suggests you need to let them know that you have a bankruptcy problem with your current trustee, that they are being removed as quickly as possible and let them know who the new trustee/director is. The Bankrupt will likewise need to inform the ATO using the form NAT 3036 (Found on the ATO website) and they will need to also notify ASIC of their resignation.
Throughout that 6 month duration you will need to remove the Bankrupt from the SMSF– including their property and assets. Remember if you are uncertain call Bankruptcy Experts Coffs Harbour for some complimentary guidance 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 will certainly be a bit different since you will need to designate a new director (as it can not be you anymore) you are going to need to make a lot of hard decisions with this so consulting with a specialist is going to be essential. You can easily contact Bankruptcy Experts Coffs Harbour for some free assistance on 1300 795 575.
From that you can acknowledge how when it involves Bankruptcy, even though one single member is taking care of troubles, it can impact the very existence of an SMSF. If you are at this point facing this issue yourself, or with a partner in a SMSF, feel free to seek financial advice to make sure you are meeting the ATO demands.
Bankruptcy is certainly never simple, but getting correct guidance is the most effective first step. If you want to discuss your approaches further, give us a call at Bankruptcy Experts Coffs Harbour or visit our website: www.bankruptcyexpertscoffsharbour.com.au or just call us on 1300 795 575.