Superannuation is puzzling enough, not to mention when you need to stress over Bankruptcy as well. At Bankruptcy Experts Cairns we frequently have people talking to us about what will occur to their super, and if you possess a regulated or industry fund (like most superfunds) then your super is secure, and Bankruptcy will have no influence upon your super. Having said that, if you have a Self-Managed Super Fund then you could discover some issues because there are a number of things you can not do while insolvent surrounding the management of finances.
This is really 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 happens 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 standard regulated managed fund prior to insolvency and save yourself all the issues described above.
Firstly, if you are considering Bankruptcy, you can not be a part of a SMSF. Why? Considering that if you are going up against bankruptcy, you will be grouped as a ‘disqualified person’. And a disqualified person can not function as an Individual Trustee. This poses a complication because generally most of the SMSFs are just 2 people, which implies both of these members must also be the individual trustees. The position of trustee sets a lot of legal guidelines, and if you are in this position I would strongly 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 observe how an individual insolvency could be somewhat harmful to a SMSF and as you can imagine the process of Bankruptcy for a SMSF is rather complicated.
Regardless if you contact us or somebody else it does not matter, just please do not walk 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 one of the steps pointed out within this article.
So what occurs 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 consider your whole structure and make sure it is complying with the basic rules, consisting of things like having a new trustee that is not coping with problems with Personal bankruptcy. The Australian Tax office will offer you a 6 month ‘grace period’ to get this done before you face penalties. And consider, often 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 huge amount of paperwork to cope with too, and you need to be continuously keeping the ATO updated of what is happening. This indicates you have to let them know that you have a bankruptcy problem 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 likewise have 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 period of time you will have to remove the Bankrupt from the SMSF– including their property and assets. Bear in mind if you are uncertain call Bankruptcy Experts Cairns 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 varied as you will want to appoint a new director (since it can not be you any longer) you are going to need to make a great deal of difficult selections with this therefore getting in touch with a specialist is going to be important. You can easily contact Bankruptcy Experts Cairns for some free guidance on 1300 795 575.
From that you can acknowledge how whenever it comes to Bankruptcy, although one single member is taking care of issues, it can affect the very existence of an SMSF. If you are at this moment facing this concern yourself, or with a partner in a SMSF, feel free to get financial advice to make sure you are satisfying the ATO needs.
Bankruptcy is never uncomplicated, but finding correct advice is the most effective first step. If you would like to talk about your choices further, contact us at Bankruptcy Experts Cairns or visit our website: www.bankruptcyexpertscairns.com.au or just call us on 1300 795 575.