Superannuation is perplexing enough, not to mention when you have to think about Bankruptcy as well. At Bankruptcy Experts Tweed Coast we frequently have people questioning us about what may happen to their super, and if you possess 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 might find some problems because there are certain things you can not do whilst insolvent surrounding the management of finances.

This is actually a growing 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 happens to these Superfunds when it boils down to Bankruptcy?

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As I recommended earlier, a fundamental solution to your SMSF concern is to put your super back into a normal regulated managed fund prior to going bankrupt and save yourself all the complications outlined above.

First and foremost, if you are taking into consideration Bankruptcy, you can not be a part of a SMSF. Why? Considering that if you are going up against personal bankruptcy, you will be grouped as a ‘disqualified person’. And a disqualified person can not function as an Individual Trustee. This poses a challenge because typically 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 bunch of legal rules, and if you are in this position I would highly advise you to be acquainted with them all– as an example because you can not ‘know or suspect’ that one of you are insolvent. Therefore, you can notice how an individual bankruptcy could be quite harmful to a SMSF and as you can envision the process of Bankruptcy for a SMSF is rather complicated.

Irrespective if you phone us or somebody else it does not matter, just please don’t walk into insolvency blind when it concerns your SMSF. In fact because Bankruptcy is so complicated with SMSFs we urge you to get both legal and financial assistance before proceeding with any one of the decisions pointed out in this article.

So what occurs if one of the members of an SMSF does enter Insolvency?

For starters, the SMSF will want to be restructured. This means that you will certainly want to consider your entire structure and make certain it is complying with the basic terms, including aspects like maintaining 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 accomplished before you face punishments. And consider, often the most optimal plan would certainly be to simply roll the fund into an industry or corporate fund.

More than these large-scale restructuring complications, there is a great deal of paperwork to deal with too, and you need to be continuously keeping the ATO updated 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 removed as soon as possible and let them know who the new trustee/director is. The Insolvent will additionally need to notify the ATO using the form NAT 3036 (Found on the ATO website) and they need to also notify ASIC of their resignation.

During that 6 month time you will need to remove the Bankrupt from the SMSF– including their property and assets. Just remember if you are not sure call Bankruptcy Experts Tweed Coast 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 will certainly be a little bit diverse because you will be required to designate a new director (simply because it can not be you from now on) you are going to need to make a great deal of hard selections with this therefore getting in touch with a professional is going to be vital. You can contact Bankruptcy Experts Tweed Coast for some free guidance on 1300 795 575.

From that you can discover how when it involves Bankruptcy, although one single member is dealing with issues, it can impact the very existence of an SMSF. If you are at this moment facing this matter yourself, or with a partner in a SMSF, please seek financial advice to make sure you are meeting the ATO needs.

Bankruptcy is never easy, but getting proper recommendations is the very best first step. If you wish to discuss your options further, give us a call at Bankruptcy Experts Tweed Coast or visit our website: or just call us on 1300 795 575.