With the growing popularity and growth in the Self-Managed Superannuation Fund (SMSF) market, it is inevitable that the interaction of the bankruptcy rules and SMSF rules will come to a head.
Therefore, it’s important that we look at how these two elements work together.
If your SMSF has a corporate trustee, the superannuation legislation requires that all members of the SMSF be directors of the corporate trustee. However, when a member becomes bankrupt, the Corporations Act prohibits a bankrupt from acting as director of any company. Furthermore, under the superannuation legislation a bankrupt is considered a “disqualified person” meaning that they cannot take part in the management of the SMSF.