Reading time: 3 minutes

It can be, but not necessarily.

On bankruptcy, the bankrupt’s property vests in the trustee in bankruptcy and any after acquired property vests in the trustee in bankruptcy as soon as it is acquired by, or devolves on, the bankrupt.  Such property is divisible amongst the bankrupt’s creditors.

A bankrupt’s interest in a superannuation fund is protected if the fund has made an election to become regulated under section 19 of the Superannuation Industry (Supervision) Act 1993 (Cth) (which is generally the case) and sections 128B, 128C and 139ZU of the Bankruptcy Act do not enable the trustee in bankruptcy to recover superannuation contributions.

Any superannuation planning strategies should be carefully documented to evidence the purpose of the contributions so as to minimise the risk that the main purpose of a contribution could be found to be to prevent, hinder or delay the transferred property from becoming divisible among the bankrupt’s creditors and liable to attack by a trustee in bankruptcy.

Here are some tips for everyone:

  • Make sure you are a member of a regulated superannuation fund.
  • Establish a pattern of superannuation contributions by making both concessional and non-concessional contributions, in particular at any time after receiving a substantial sum of money (e.g. inheritance).
  • Maximise concessional contributions in order to minimise assets exposed to creditors’ claims and maximise your tax benefits.  The contribution limits vary depending on your age and how much money you have in super, so do your homework and seek professional advice.  The annual cap is currently $25,000 for persons under 60 and $35,000 for persons over 60.
  • Make non-concessional (i.e. after tax) contributions in order to maximise your superannuation member balance for retirement and to establish a pattern of contributions, particularly if you receive a significant sum of money (e.g. inheritance) or are approaching retirement age.  The annual cap is $150,000, but persons under 65 can make a maximum contribution of $450,000 by bringing forward two years of contributions.

Here are some tips if you have a self managed super fund (SMSF):

  • Your SMSF should have a corporate trustee, not individual trustees.  As the SMSF’s assets are owned by the trustee, not the individual members, if an individual member is bankrupted the SMSF’s assets would not need to be transferred to a new trustee and there would be no dispute as to the capacity in which the assets are owned.
  • In order to comply with superannuation legislation you must be a director of the corporate trustee, but you do not have to own shares in the corporate trustee.  Any shares in the corporate trustee could be owned by your spouse or the trustee of a discretionary trust.

Please note that LegalVision is a commercial law firm and cannot assist with these matters.

Webinars

Employment Essentials for Tech Businesses

Thursday 5 May | 11:00 - 11:45am

Online
Protect your tech business and your employees by understanding your employment legal obligations. Register for our free webinar today.
Register Now

How to Protect and Enforce Your Trade Mark

Wednesday 11 May | 11:00 - 11:45am

Online
Protect your business’ brand from copycats and competitors. Register for this free webinar to learn how.
Register Now

Corporate Governance 101: Responsibilities for New Directors

Friday 13 May | 11:00 - 11:45am

Online
If you are a new company director, join our free webinar to understand your legal compliance obligations. Register today.
Register Now

How Franchisors Can Avoid Misleading and Deceptive Conduct

Wednesday 18 May | 11:00 - 11:45am

Online
Ensure your franchise is not accused of misleading and deceptive conduct. Register for our free webinar today.
Register Now

New Kid on the Blockchain: Understanding the Proposed Laws for Crypto, NFT and Blockchain Projects

Wednesday 25 May | 10:00 - 10:45am

Online
If you operate in the crypto space, ensure you understand the Federal Government’s proposed licensing and regulation changes. Register today for our free webinar.
Register Now

How to Expand Your Business Into a Franchise

Thursday 26 May | 11:00 - 11:45am

Online
Drive rapid growth in your business by turning it into a franchise. To learn how, join our free webinar. Register today.
Register Now

Day in Court: What Happens When Your Business Goes to Court

Thursday 2 June | 11:00 - 11:45am

Online
If your business is going to court, then you need to understand the process. Our free webinar will explain.
Register Now

How to Manage a Construction Dispute

Thursday 9 June | 11:00 - 11:45am

Online
Protect your construction firm from disputes. To understand how, join our free webinar.
Register Now

Startup Financing: Venture Debt 101

Thursday 23 June | 11:00 - 11:45am

Online
Learn how venture debt can help take your startup to the next level. Register for our free webinar today.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Our Awards

  • 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Winner – Australasian Lawyer
  • 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year - Australasian Law Awards
  • 2019 Most Innovative Firm - Australasian Lawyer